\u3000\u3 China Vanke Co.Ltd(000002) 539 Chengdu Wintrue Holding Co.Ltd(002539) )
Core view
The performance has increased significantly, reaching a new high, and the construction of iron phosphate project has been steadily promoted. According to the company's announcement, in 2021, due to the year-on-year increase in the sales volume and gross profit margin of compound fertilizer products, the year-on-year increase in the prices of alkali products and phosphorus chemical products (including yellow phosphorus, sodium tripolyphosphate, etc.) and the year-on-year increase in gross profit margin, the company's operating performance increased significantly year-on-year: in 2021, the company realized an operating revenue of 14.898 billion yuan, a year-on-year increase of 62.74%; The net profit attributable to the parent company was 1.232 billion yuan, a year-on-year increase of 147.06%, and the company's performance continued to reach a new high. Meanwhile, the company expects the net profit in the first quarter of 2022 to be 450 million yuan to 480 million yuan, with a year-on-year increase of 149.15% - 165.76%, and the performance is expected to exceed our expectations. The market prospect of new compound fertilizer is broad, and the leading enterprises usher in a good opportunity for development. We are optimistic that the company will firmly establish the leading position of compound fertilizer, and will continue to steadily promote the construction of iron phosphate project in the future.
The compound fertilizer business has laid a profitable foundation, and the profitability of soda ash ammonium chloride and yellow phosphorus products is good. The company has established an integrated industrial chain and has a complete industrial chain of nitrogen fertilizer and phosphorus fertilizer except urea. Under the background of the general rise of raw materials, the company has a strong cost advantage and pricing power to maintain the relative toughness of operation. In the future, the company plans to build a slow and controlled-release compound fertilizer project with an annual output of Shanghai Pudong Development Bank Co.Ltd(600000) tons and 800000 tons in Songzi City and Yicheng city, Hubei Province, respectively, to further consolidate the leading position of the compound fertilizer industry. In the critical period of reform and reshuffle in the fertilizer industry, we are optimistic that the company will continue to promote the cost leading development strategy and strive to be in the forefront of the industry. At the same time, the company currently has a capacity of Shanghai Pudong Development Bank Co.Ltd(600000) dual tons of soda ash and ammonium chloride, and the current profit level is relatively good. In addition, the company has a production capacity of 60000 tons of yellow phosphorus, all of which are used for external sales. Recently, the price of yellow phosphorus is at a high level, and its profitability has been significantly enhanced.
Enter the field of new energy, open up growth space, and steadily promote the construction of iron phosphate projects. On September 4, 2021, the company announced that it would build 350000 tons of battery grade iron phosphate and related supporting projects in Lingang Industrial Park, Songzi City, Hubei Province; On January 14, 2022, the company plans to increase no more than 2.5 billion yuan (no more than 303 million shares and 30% share capital) to invest in the joint production project of comprehensive utilization of phosphate rock resources, production of new energy materials and slow and controlled release compound fertilizer, as well as supplement working capital. We are optimistic that iron phosphate, compound fertilizer and other projects have significant synergy with the company's original industry, and iron phosphate can realize linkage production with the company's core product compound fertilizer, which will help consolidate the company's industrial chain advantages.
Risk warning: downstream demand is less than expected; The commissioning progress of new projects is lower than expected; Product price decline, etc.
Investment advice: maintain the "buy" rating. In the future, the company will continue to focus on the production and sales of compound fertilizer, and will rely on phosphate rock resources to expand downward along the "phosphate rock phosphoric acid ferric phosphate", extend the industrial chain and enter the new energy market. We expect the net profit attributable to the parent company from 2022 to 2024 to be RMB 1.716/19.85/2.175 billion, with a year-on-year growth rate of 39.3% / 15.7% / 9.6%; Diluted EPS = 1.70/1.97/2.15 yuan, corresponding to the current stock price, corresponding to PE = 8.6/7.4/6.8x.
