\u3000\u3 China Vanke Co.Ltd(000002) 312 Sichuan Development Lomon Co.Ltd(002312) )
Event: on April 13, 2022, Sichuan Development Lomon Co.Ltd(002312) released the annual report of 2021: the operating revenue was 6.645 billion yuan, an increase of 28.28% year-on-year; The net profit attributable to the parent company was 1.016 billion yuan, a year-on-year increase of 51.94%; The net profit deducted from non parent company was 673 million yuan, with a year-on-year increase of 103.10%; The weighted average return on net assets was 13.32%, down 4.13 percentage points year-on-year. The gross profit margin of sales was 20.51%, a year-on-year increase of 2.63 percentage points; The net profit margin of sales was 15.29%, a year-on-year decrease of 2.4 percentage points.
Among them, Q4 achieved a revenue of 1.906 billion yuan in 2021, an increase of 35.11% year-on-year and 13.03% month on month; The net profit attributable to the parent company was 122 million yuan, with a year-on-year increase of 202.54% and a month on month decrease of 40.43%; The net profit deducted from non parent company was 200 million yuan, with a year-on-year increase of 37.18% and a month on month increase of 18.34%; The weighted average return on net assets was 1.8%, up 0.74 percentage points year-on-year and down 1.3 percentage points month on month. The gross profit margin of sales was 21.23%, with a year-on-year increase of 8.95 percentage points and a month on month decrease of 0.95 percentage points; The net sales interest rate was 6.39%, with a year-on-year increase of 3.55 percentage points and a month on month decrease of 5.81 percentage points.
Comments:
Phosphorus chemical industry has ushered in a strong business cycle, and the profitability of the company has been significantly enhanced
In 2021, the company achieved an operating revenue of 6.645 billion yuan, a year-on-year increase of 28.28%; The net profit attributable to the parent company was 1.016 billion yuan, a year-on-year increase of 51.94%; The net profit deducted from non parent company was 673 million yuan, with a year-on-year increase of 103.10%. The substantial year-on-year increase in the company’s profit is mainly due to the strong business cycle of the phosphorus chemical industry. The sales prices of the company’s main products such as industrial grade monoammonium phosphate, feed grade calcium hydrogen phosphate and fertilizer grade monoammonium phosphate increased significantly year-on-year and maintained at a high level. In 2021, the sales volume of industrial grade monoammonium phosphate of the company was 263700 tons, a year-on-year decrease of 26.79%, the revenue was 1.071 billion yuan, a year-on-year decrease of 11.12%, and the average sales unit price was 4062 yuan / ton, a year-on-year increase of 21.40%; The sales volume of feed grade dicalcium phosphate was 386100 tons, a year-on-year decrease of 18.39%, the revenue was 924 million yuan, a year-on-year increase of 21.36%, and the average sales unit price was 2394 yuan / ton, a year-on-year increase of 48.71%; The sales volume of fertilizer series products was 1.445 million tons, a year-on-year increase of 4.28%, the revenue was 3.472 billion yuan, a year-on-year increase of 61.44%, and the average sales unit price was 2403 yuan / ton, a year-on-year increase of 54.82%.
In Q4 of 2021, the company realized a net profit attributable to the parent company of 122 million yuan, with a year-on-year increase of 202.54% and a month on month decrease of 40.43%; The net profit deducted from non parent company was 200 million yuan, with a year-on-year increase of 37.18% and a month on month increase of 18.34%. In Q4 of 2021, the price of the company’s main products fell, while the price of raw materials remained high, and the company’s gross profit margin decreased month on month. The company’s non recurring profit and loss in the fourth quarter was -78 million yuan, a decrease of 114 million yuan compared with 36 million yuan in the third quarter.
Benefiting from the innovative and pragmatic corporate culture and lean management advantages, the company’s cost management advantages are prominent, and the cost rate is at a low level in the same industry. In 2021, the company’s sales expense ratio was 1.06%, a year-on-year decrease of 0.68 percentage points; The management expense ratio was 6.58%, up 0.83 percentage points year-on-year; The financial expense ratio was 0.34%, a year-on-year decrease of 1.04 percentage points, mainly due to the significant decrease in Operating Loans in this period compared with the previous year. By the end of 2021, the company’s short-term loans were 105 million yuan, a decrease of 87.43% compared with 835 million yuan in the same period last year.
Focus on the development of main business and actively promote industrial upgrading
Adhering to the development mode of “scarce resources + technological innovation + industrial chain integration”, the company focuses on the development of the main business of phosphorus chemical industry, actively promotes the industrial upgrading of phosphorus chemical business, further optimizes the product structure, expands the range of fine phosphate products, and improves the market share of the company in the subdivided field of fine phosphate. The company’s core products industrial grade monoammonium phosphate, fertilizer grade monoammonium phosphate and feed grade dicalcium phosphate continue to maintain the leading position in the industry. The fine phosphate products independently developed catch up from behind and gradually establish the leading position in the industry. At the same time, the company actively arranged the incremental market and took a solid step in other fine phosphate technology reserves and the industrial layout of new energy materials. During the reporting period, the output of industrial grade monoammonium phosphate of the company was 269800 tons, a year-on-year decrease of 26.05%. In 2021, the price of fertilizer grade monoammonium phosphate rose rapidly. The company adjusted the product structure from the perspective of economic benefits, and responded to the call of the state to ensure the supply of fertilizer, so as to improve the output of phosphate fertilizer and ensure the supply in China. The output of feed grade dicalcium phosphate was 383500 tons, with a year-on-year increase of 5.14%. Xiangyang base of the company mainly produces feed grade dicalcium phosphate, which has the advantage of sulfur phosphorus titanium circular economy that is difficult to replicate in the industry. With the gradual production of Baizhu phosphate mine owned by Xiangyang base and the gradual improvement of industrial chain supporting facilities, the cost leading advantage in China is more and more obvious, and its industry leading position is further consolidated. The output of fertilizer ammonium phosphate reached 691700 tons, a year-on-year increase of 7.35%. According to the market demand, the company increased the output of fertilizer grade monoammonium phosphate, especially granular ammonium phosphate, and achieved good economic benefits.
Acquire Tianrui mining and further improve the integrated industrial chain
Deyang and Xiangyang bases of the company are rich in phosphate rock resource allocation. Hubei Baizhu phosphate mine has been put into production, with a production scale of 1 million tons / year; At present, Hongxing Phosphate Mine in Xiangyang base has reached the end of mining, and about 150000 tons of phosphate rock can still be mined every year; The company is acquiring Tianrui mining. After the acquisition, the company’s phosphate rock raw material resource reserve will increase significantly. After the completion of Tianrui mining, the phosphate rock production capacity will be increased by 2.5 million tons per year, most of which will meet the phosphate rock demand of Mianzhu base. At that time, the company will have an annual production capacity of 3.65 million tons of phosphate rock. The two bases are equipped with 900000 tons of sulfuric acid and 100000 tons of synthetic ammonia in Deyang base, which can not only ensure stable production, but also effectively reduce product costs. The company has a phosphate production capacity of 1.8 million tons in Mianzhu base, Sichuan. It is the main production base of chemical fertilizer, compound fertilizer and industrial grade monoammonium phosphate. All phosphate ores used in Mianzhu production base need to be purchased externally, and more than 2 million tons of phosphate ores need to be purchased every year. The phosphate rock provided by Tianrui mining has the advantages of short transportation distance, low cost, stable output and low impurity content. The acquisition of Tianrui mining will help listed companies directly obtain high-quality and scarce phosphate rock resources in Sichuan Province, improve the company’s phosphorus chemical industry chain, and further improve the guarantee capacity of upstream phosphate rock resources in the company’s main production base.
Relying on the advantages of resources and production capacity, the company continues to increase the layout of lithium iron phosphate industrial chain
Relying on the high-quality phosphate rock resources and the production capacity advantages of industrial grade monoammonium phosphate, the company actively develops the iron phosphate and lithium iron phosphate new material industry and continues to increase its weight. The company invested 12 billion yuan to build Deyang Sichuan Development Lomon Co.Ltd(002312) lithium battery new energy materials project in Deyang ABA Ecological Economic Industrial Park. The project has been listed as a key promotion project in Sichuan Province. The project has been officially started, and some project land and environmental assessment replies have been obtained. Safety assessment, job assessment and stability assessment have been filed, and energy assessment approval and construction permit approval are being promoted in an orderly manner; At the same time, the company orderly promoted lithium new energy material projects in Panzhihua, Hubei and other places.
Lithium iron phosphate is the downstream product of the company’s existing phosphorus chemical product industrial monoammonium phosphate. The company’s output of industrial monoammonium phosphate is more than 360000 tons, which is the largest industrial monoammonium phosphate production enterprise in the world. After the acquisition of Tianrui mining, the company will have an annual phosphate rock production capacity of 3.65 million tons. With the help of phosphate rock resource advantages, the company will effectively give play to Industrial Synergy and improve the profitability of the project.
Strive to solve the problem of comprehensive utilization of phosphogypsum and realize green and sustainable development
The company’s phosphogypsum comprehensive utilization project has been put into operation and accepted successively, and the phosphogypsum product structure has become richer and more perfect. The annual production capacity of 1.5 million tons of cement retarder (including the original production capacity of Shanghai Pudong Development Bank Co.Ltd(600000) tons / year), 700000 tons of building gypsum powder, 10 million square meters of gypsum wallboard and block, 200000 tons of plastering gypsum and 200000 tons of gypsum putty is gradually completed. Focusing on the optimization of product structure, during the reporting period, the company established an excellent R & D team and sales team to improve the product quality and grade of phosphogypsum products and explore the market channels of phosphogypsum products, which is conducive to the comprehensive utilization of resources and green and sustainable development of the company. The company actively applies for the certification of gypsum green building materials, and takes the lead in building an industrialized phosphogypsum purification device in the industry by combining the introduction of advanced technology and equipment with independent research and development. By reducing the impurities in phosphogypsum, it can meet the quality requirements of green building materials products, and provide raw material guarantee for the next high-quality application of phosphogypsum.
The high prosperity of the industry continues, and the company’s main business is expected to continue to grow
In 2022, the prices of the company’s main products continued to fluctuate at a high level. According to wind, on April 12, the price of phosphate rock was 730 yuan / ton, up 7.35% from the beginning of the year; The price of monoammonium phosphate was 3600 yuan / ton, an increase of 28.57% compared with the beginning of the year; The price of calcium hydrogen phosphate was 3942 yuan / ton, an increase of 25.71% compared with the beginning of the year. With the continuous rise of global grain prices, the prosperity of related products will continue. It is expected that the company’s main business will still maintain a certain growth in 2022.
It is estimated that the net profit attributable to the parent company in 2022, 2023 and 2024 will be RMB 849 million, RMB 981 million and RMB 1.633 billion respectively, and the EPS will be RMB 0.40, RMB 0.46 and RMB 0.76/share, corresponding to 28.17, 24.40 and 14.66 times of PE, maintaining the “buy” rating.
Risk warning: macroeconomic fluctuation risk; The production capacity is lower than expected; Risk of price fluctuation of raw materials; Future demand decline; The progress of the new project is less than expected.
