Xinyangfeng Agricultural Technology Co.Ltd(000902) Xinyangfeng Agricultural Technology Co.Ltd(000902)
Core conclusion
Event: on April 18, the company released the first quarter report of 2022: in 2022q1, the operating revenue was 4.545 billion yuan, a year-on-year increase of 37.25%, the net profit attributable to the parent company was 407 million yuan, a year-on-year increase of 24.14%, and the net profit deducted from non parent company was 406 million yuan, a year-on-year increase of 25.24% (after adjustment).
The high boom of agrochemical industry has helped the company greatly increase its performance. The substantial improvement of the company’s performance in the first quarter was mainly due to the high prosperity of its main business compound fertilizer and monoammonium phosphate. According to Baichuan information, the average market prices of monoammonium phosphate and compound fertilizer in 2022q1 were 3078.6 yuan / ton and 3265.8 yuan / ton respectively, with a year-on-year increase of 40.8% and 42.2% respectively. At the same time, there is a strong demand for chemical fertilizer in the spring ploughing season. At present, the market prices of monoammonium phosphate and compound fertilizer in China have increased to 3540 yuan / ton and 3501 yuan / ton respectively. We are optimistic about the further rise of the company’s profit center in the second quarter.
The integration of industrial chain has obvious advantages and smoothes the fluctuation of raw materials. The gross profit margin of the company in 2022q1 was 17.26%, with a year-on-year increase of -2.91pct; The net interest rate was 8.96%, with a year-on-year increase of -1.31pct. According to Baichuan information, the prices of sulfur and synthetic ammonia in 2022q1 increased by 38% and 26% respectively year-on-year. Meanwhile, the price of potash fertilizer also continued to rise due to events such as the conflict between Russia and Ukraine, which promoted the rise of the company’s costs. At present, the company has 2.7 million tons of sulfuric acid, 150000 tons of synthetic ammonia, 150000 tons of nitric acid and other upstream supporting capacity. At the same time, 300000 tons of synthetic ammonia capacity invested by convertible bonds is expected to be put into operation in the second half of this year. The integrated supporting advantages of the company are obvious, which ensures a stable profit level.
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 further expanded the production capacity of phosphorus series and associated fluorosilicone new energy materials. Previously, it had cooperated with Jiangsu Lopal Tech.Co.Ltd(603906) , Gem Co.Ltd(002340) and entered the iron phosphate industry. The company has a total planned capacity of 300000 tons of iron phosphate and 150000 tons of lithium iron phosphate. At present, the 50000 tons of iron phosphate project in Jingmen phase I, which is cooperating with Jiangsu Lopal Tech.Co.Ltd(603906) has entered the trial production stage and is expected to contribute profits soon. Many new projects will further deepen the company’s new energy layout, give full play to its leading advantages of phosphorus chemical industry and the synergy of industrial chain, and lay the foundation for the company’s long-term growth in the “two main and one auxiliary” industrial pattern.
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/11.1x/9.3x 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
