\u3000\u30 China Baoan Group Co.Ltd(000009) 02 Xinyangfeng Agricultural Technology Co.Ltd(000902) )
Event: 1) the company achieved a revenue of 11.8 billion yuan in 2021, a year-on-year increase of + 17.2%; The net profit attributable to the parent company was 1.21 billion yuan, a year-on-year increase of + 28.2% (after adjustment). 2) Yangfeng Chuyuan, a wholly-owned subsidiary, plans to invest about 6 billion yuan to build a comprehensive utilization project of phosphorus chemical industry and phosphorus ore associated fluorosilicone resources, including 1.5 million tons of beneficiation, 250000 tons of purified phosphoric acid, 900000 tons of sulfuric acid, 100000 tons of high-grade flame retardant, 1.5 million tons of phosphogypsum comprehensive utilization, 30000 tons of anhydrous hydrogen fluoride, 20000 tons of white carbon black, 10000 tons of lithium hexafluorophosphate and other important products and supporting intermediates.
Under the boom period, the sales volume of new-type compound fertilizer products continues to grow rapidly. Since 2020, the agrochemical industry has entered a once-in-a-decade high business cycle, and the main grain and agricultural materials products have risen rapidly. In this context, in 2021, the company realized the simultaneous rise of the price of main products and the volume and price of new compound fertilizer sales. Among them, the annual sales volume of phosphate and compound fertilizer was 4.614 million tons, with a year-on-year increase of – 3.7%. We believe that the high growth in the first half of the year was smoothed due to the sharp rise in the price of urea and other simple fertilizers in the third quarter and the low willingness of downstream dealers to replenish the inventory of compound fertilizer. However, the sales volume of the company’s new compound fertilizer was 903000 tons, with a year-on-year increase of + 25.4%. At the same time, the average sales price was + 13.7% year-on-year and the gross profit margin was + 1.77pct. The increase in the proportion of new fertilizer sales marks the continuous optimization of the company’s product structure and the profit center is expected to continue to improve.
Steady progress was made in capacity expansion, entering new energy and opening the second growth curve. In 2021, the company added more than 500000 tons of new fertilizer capacity, and the Shanghai Pudong Development Bank Co.Ltd(600000) tons of special fertilizer project for new crops in Gansu in 2022 is expected to be put into operation in the second half of the year. The company’s fertilizer business capacity has expanded steadily and its market competitiveness has improved. At the same time, the company has further expanded the production capacity of phosphorus series and associated fluorosilicone new energy materials. Previously, the company has cooperated with Jiangsu Lopal Tech.Co.Ltd(603906) , Gem Co.Ltd(002340) and cut into the iron phosphate industry. This announcement of the new project will further deepen the company’s new energy layout, give full play to its leading advantages of phosphorus chemical industry and the coordination effect of industrial chain, and lay a foundation for the company’s long-term growth in the “two main and one auxiliary” industrial pattern.
We will continue to increase investment in technical services and R & D to consolidate our competitive advantage. In 2021, the company’s R & D expenses increased by 31.6% year-on-year. At present, the company’s technical service team has nearly 200 agronomists, and 2658 high standard demonstration field bases have been built. At the same time, the company continued to promote the collaborative strategy of seed and fertilizer, and took a stake in Longping biology in February 2021. High quality technical service is an important way for the company to realize differentiated competition and enhance user stickiness.
Investment suggestion: the company is expected to realize net profit attributable to the parent company of RMB 1.573/2.158/2.578 billion from 2022 to 2024, corresponding to the current PE of 15.3x/11.2x/9.4x respectively, maintaining the “buy” rating.
Risk warning: the project construction is not as expected; Weakening of environmental protection management Shenzhen Agricultural Products Group Co.Ltd(000061) and fluctuations in raw material prices
