\u3000\u30 China High-Speed Railway Technology Co.Ltd(000008) 93 Asia-Potash International Investment (Guangzhou) Co.Ltd(000893) )
Company comments
On April 1, the company issued the annual report of 2021, the announcement of reaching the production capacity of 1 million ton project and entrusted construction. The core contents and analysis are as follows:
The performance grew rapidly, and the net profit deducted increased by 62 times. In 2021, the company’s revenue was 833 million yuan, a year-on-year increase of 129.4%; The net profit attributable to the parent company was 895 million yuan, a year-on-year increase of 1401.4%; Net profit deducted from non parent company was 290 million yuan, with a year-on-year increase of 6232.5%. The output of potash fertilizer is 332000 tons and the sales volume is 350000 tons. The performance growth was mainly due to the sharp rise in product prices. According to the data of Baichuan Yingfu, the CFR market price in Southeast Asia at the end of 2021 was US $600 / ton, an increase of US $370 / ton over the beginning of the year.
The 1 million ton project has reached production capacity, laying the cornerstone of performance in 2022. As of March 27, 2022, the single day output has reached 3261 tons, a record high, and the single day output has exceeded 3000 tons for six consecutive days, exceeding the single day output requirement of 1 million tons per year. The company’s production capacity will increase from 250000 tons in 2021 to 1 million tons at present, realizing the leap of production capacity and consolidating the cornerstone of performance in 2022.
Start the construction of new projects and accelerate the goal of 3 million tons of production capacity. Start the infrastructure construction of the subsequent 2 million ton expansion project through “entrusted construction” to avoid missing the best construction period in the dry season in Laos, so as to ensure rapid and continuous expansion and achieve the company’s strategic goal of more than 3 million tons in the short term.
Prepare cash acquisition plan, deal with the risk of reorganization failure, and ensure the completion of resource acquisition. The merger and reorganization of agricultural potassium resources will be started in 2021, and the reserves of potassium chloride will increase from 152 million tons to 829 million tons. The restructuring plan was not approved in January 2022. In order to enhance its core competitiveness, the company decided to continue to promote the reorganization after the 1 million ton project was completed. If the restructuring plan by issuing shares and other means fails to be implemented smoothly, the company will continue to promote it through cash acquisition.
With both volume and price rising, the company’s performance growth in 2022 can be expected. The global potash supply gap will further increase in 2022. Belarus and Russia account for 21% and 19% of the world’s total potash fertilizer exports respectively. No solution has been found to the problem of sanctions against Belarus. Russia announced the temporary suspension of fertilizer exports. Nearly 40% of the world’s potash fertilizer exports are limited. The situation of potash fertilizer in short supply has intensified, and the price may continue to rise in 2022. At the same time, the company’s production capacity has increased rapidly, and the company’s performance is expected to maintain high growth in 2022.
Investment advice
Based on the closing price on April 1, we expect that the EPS of the company in 2022, 2023 and 2024 will be 2.79/3.38/4.18 yuan respectively, and the corresponding PE will be 12.34/10.19/8.23 times respectively. Combined with the upward trend of the industry and the improvement of the company’s output, we are optimistic about the development of the company. Maintain a “strongly recommended” rating.
Risk tips
Repeated overseas epidemics, exchange rate changes, geopolitical changes, etc.
