\u3000\u30 China High-Speed Railway Technology Co.Ltd(000008) 93 Asia-Potash International Investment (Guangzhou) Co.Ltd(000893) )
Matters:
Company announcement: Recently, the holding subsidiary Zhongnong Hong Kong and shenfuli signed the equity transfer agreement between shenfuli company and Zhongnong mineral Investment Co., Ltd. (Hong Kong) on Zhongnong potash fertilizer Co., Ltd. Zhongnong Hong Kong plans to acquire 10% equity of Zhongnong potash fertilizer held by shenfuli with its own capital of RMB 66 million. After the acquisition, the company will hold 100% equity of Zhongnong potash fertilizer.
Guoxin chemical’s view:
1) the acquisition of minority shareholders’ equity at a discount is in line with the principle of maximizing the interests of the company and all shareholders. According to the income method and market method, the total equity value of Zhongnong potash fertilizer is 3.634 billion yuan and 3.704 billion yuan respectively. The acquisition of 10% equity of minority shareholders with 66 million yuan is equivalent to the valuation of all equity transactions of Zhongnong potash fertilizer Co., Ltd. at 660 million yuan, which is far lower than the above two valuation values, which is conducive to the company to obtain more performance benefits in the future. It is not only to further integrate enterprise resources, but also to better promote the company’s development strategy and improve decision-making efficiency, which is in line with the company’s long-term development plan and the principle of maximizing the interests of the company and all shareholders.
2) the overseas supply of potash fertilizer is frequently subject to force majeure, and the company’s potash fertilizer sales in Southeast Asia have price elasticity. Belarus and Russia account for 37% of the global potash supply, and the export of potash fertilizer is limited due to sanctions and geographical conflicts; At the same time, with the rising prices of grain and bulk commodities, the global price of potash fertilizer has risen sharply. In 2021, the company’s overseas revenue accounted for 71.6%, mainly sold to Southeast Asia, which is one of the main consumption markets of potash fertilizer in the world. The price was $670750 / ton CFR at the end of March 2022. Since April, the price has risen to $750900 / ton CFR, much higher than China’s $590 / ton CFR. The company’s potash fertilizer sales in Southeast Asia have greater price elasticity.
3) investment suggestion: raise the company’s profit forecast and maintain the “buy” rating. Due to the company’s acquisition of minority shareholders’ equity and the recent continuous rise in the price of potash fertilizer in Southeast Asia, we raised the company’s net profit attributable to the parent company from 2022 to 2024 to RMB 1.94/22.1/23.3 billion (previously RMB 1.53/17.8/2.2 billion), with a year-on-year growth rate of 116.7/14.0/5.5%, diluted EPS = 2.56/2.92/3.08, corresponding to pe13.5% 4/11.8/11.2x。 The company’s 1 million T / a potash fertilizer reconstruction and expansion project in Laos successfully reached production, fully benefited from the high prospect of the potash fertilizer industry, continued to promote the acquisition of Pengxia nongbo potash mine, expanded the reserve of potash mine resources and maintained the “buy” rating.
Comments:
The acquisition of minority shareholders’ equity at a discount is in line with the principle of maximizing the interests of the company and all shareholders
The current equity structure of the company’s holding subsidiary Zhongnong potash fertilizer Co., Ltd. (hereinafter referred to as “Zhongnong potash”) is: Zhongnong mineral Investment Co., Ltd. (Hong Kong) (hereinafter referred to as “Zhongnong Hong Kong”), sengfalyco, Ltd (hereinafter referred to as “Shenzhen Fuli”) holds 90% and 10% equity respectively. In order to further integrate enterprise resources, improve the core asset rights and interests enjoyed by the company, promote the company’s development strategy and improve decision-making efficiency, the holding subsidiary Zhongnong Hong Kong and shenfuli recently signed the equity transfer agreement between shenfuli and Zhongnong mineral Investment Co., Ltd. (Hong Kong) on Zhongnong potassium fertilizer Co., Ltd. Zhongnong Hong Kong plans to purchase 10% equity of Zhongnong potassium fertilizer held by shenfuli with its own capital of 66 million yuan, After the acquisition, the company will hold 100% equity of Zhongnong potash.
According to Beijing Tianjian Xingye Assets Appraisal Co., Ltd., taking December 31, 2021 as the appraisal base date, according to the appraisal results of income method, the total equity value of Zhongnong potash fertilizer is 3.634 billion yuan; According to the market method, the total equity value of Zhongnong potash fertilizer Co., Ltd. is 3.704 billion yuan. The acquisition of 10% equity of minority shareholders with 66 million yuan is equivalent to the valuation of all equity transactions of Zhongnong potash fertilizer Co., Ltd. at 660 million yuan, which is far lower than the above two valuation values, which is conducive to the company to obtain more performance benefits in the future. It is not only to further integrate enterprise resources, but also to better promote the company’s development strategy and improve decision-making efficiency, which is in line with the company’s long-term development plan and the principle of maximizing the interests of the company and all shareholders.
The overseas supply of potash fertilizer is frequently subject to force majeure, and the company’s potash fertilizer sales in Southeast Asia have price elasticity
Belarus and Russia account for 37% of the global potash supply, and the export of potash fertilizer is limited due to sanctions and geographical conflicts; At the same time, with the rising prices of grain and bulk commodities, the global price of potash fertilizer has risen sharply. In 2021, the company’s overseas revenue accounted for 71.6%, mainly sold to Southeast Asia, which is one of the main consumption markets of potash fertilizer in the world. The price was $670750 / ton CFR at the end of March 2022. Since April, the price has risen to $750900 / ton CFR, much higher than China’s $590 / ton CFR. The company’s potash fertilizer sales in Southeast Asia have greater price elasticity.
Continue to promote the acquisition of Pengxia nongbo potash mine and expand the reserve of potash mine resources
The total potash mining reserves of Laos province are 5.2 billion tons of pure potash, and the total potash mining reserves of Laos province are 3.5 billion tons. We are promoting the acquisition of 179.8 square kilometers of potassium salt mine in Pengxia nongbo village, nongbo County, Gammon Province, Laos, which is connected with the existing potassium salt mining area. The total reserves of potassium salt mine are about 3.935 billion tons, equivalent to 677 million tons of pure potassium chloride. The company started the infrastructure construction of the 2 million ton expansion project through “entrusted construction”, and plans to increase the production capacity to more than 3 million tons within 3-5 years to build a world-class potash fertilizer supplier.
Investment suggestion: raise the company’s profit forecast and maintain the “buy” rating
Due to the company’s acquisition of minority shareholders’ equity and the recent continuous rise in the price of potash fertilizer in Southeast Asia, we raised the company’s net profit attributable to the parent company from 2022 to 2024 to RMB 1.94/22.1/23.3 billion (previously RMB 1.53/17.8/2.2 billion), with a year-on-year growth rate of 116.7/14.0/5.5%, diluted EPS = 2.56/2.92/3.08, corresponding to pe13.5% 4/11.8/11.2x。 The company’s 1 million T / a potash fertilizer reconstruction and expansion project in Laos successfully reached production, fully benefited from the high prospect of the potash fertilizer industry, continued to promote the acquisition of Pengxia nongbo potash mine, expanded the reserve of potash mine resources and maintained the “buy” rating.
Risk tips
Systemic risks such as local regional conflicts and infectious diseases; The construction progress of new capacity of potash fertilizer may be lower than expected; The high price of potash fertilizer leads to lower downstream demand than expected
