\u3000\u30 China High-Speed Railway Technology Co.Ltd(000008) 93 Asia-Potash International Investment (Guangzhou) Co.Ltd(000893) )
Event: the company released its annual report for 2021. During the reporting period, the company achieved a revenue of 833 million yuan (year-on-year + 129.36%) and a net profit attributable to the parent company of 895 million yuan (year-on-year + 140143%).
The operation of potash fertilizer is stable, and the scale advantage is expected to continue to increase: the company focuses on potash mining, potash fertilizer production and sales. The Dongtai potash mine project developed and implemented in Gammon Province, Laos is the first potash fertilizer project in China to realize industrial production abroad. Its subsidiary Zhongnong international has 35 square kilometers of potash mine in Laos, with a total reserve of 1.002 billion tons of potash mine and 152 million tons of pure potassium chloride, which is rich in mineral resources. Recently, the company’s potash fertilizer production capacity has been increasing. According to the announcement, during the reporting period, the company has completed the upgrading and efficiency improvement of 250000 ton production system. At the same time, the 1 million ton / year potash fertilizer reconstruction and expansion project has been put into operation in 2021. At present, it has reached the production capacity. During the reporting period, the output of potash fertilizer products is 332000 tons and the sales volume is 350400 tons. The company’s potash fertilizer business is stable. In addition, the company is promoting the reorganization of 179.8 square kilometers of potash mine in Laos. After completion, it will have 214.8 square kilometers of minerals, with a total amount of about 4.937 billion tons of potash ore and about 829 million tons of pure potassium chloride, becoming the largest potash fertilizer resource enterprise in Asia. In the future, the company’s relevant production capacity is expected to continue to increase. According to the announcement, the company plans to increase the production capacity to more than 3 million tons in 3-5 years. In the future, with the gradual enhancement of the company’s scale advantage, the company’s profitability is expected to gradually improve.
The prosperity of potash fertilizer industry is rising, and overseas potash fertilizer bases need to be developed urgently: the increase of global population in recent years has formed a large demand for Shenzhen Agricultural Products Group Co.Ltd(000061) and driven the continuous rise of global potash fertilizer product prices. Meanwhile, the continuous fermentation of the conflict between Russia and Ukraine since February 2022 has further exacerbated the uncertainty of global potash supply. According to the Wall Street Journal and Argus, Russia and Belarus are the world’s second and third largest potash producers respectively. The conflict between Russia and Ukraine has had a great impact on product transportation and Russian fertilizer export. At the same time, due to the sanctions of the European Union and the United States in recent years and the restrictions imposed on the transportation of Belarusian potash through Lithuania, there is also great uncertainty in the current supply of Belarusian potash. In recent years, China has been paying more and more attention to food security. Potash minerals are mineral resources in serious shortage in China. As a large potash fertilizer consumer, China’s demand for potash fertilizer import has increased year by year in recent years, so it is necessary to take measures such as potash fertilizer collection and storage and supporting overseas potash bases to ensure its own potash fertilizer supply and food security. According to the announcement, the company, as the first Chinese funded enterprise in China to realize the mass production of one million tons of potash fertilizer abroad, has a prominent industry leading position. In the future, with the continuous increase of its own scale advantage and the continuous improvement of global potash price, the company is expected to fully benefit.
Investment suggestion: we expect the net profit of the company from 2022 to 2024 to be 1.58 billion yuan, 2.04 billion yuan and 2.63 billion yuan respectively, and give Buy-A investment rating.
Risk warning: the landing of projects under construction is not as expected; The macro environment is less than expected
