\u3000\u3 China Vanke Co.Ltd(000002) 588 Stanley Agriculture Group Co.Ltd(002588) )
Event: on April 19, the company released the annual report of 2021 and the first quarterly report of 2022: in 2021, the operating revenue was RMB 6.436 billion, with a year-on-year increase of 4.09%, the net profit attributable to the parent company was RMB 425 million, with a year-on-year increase of 47.81%, and the net profit deducted from the non parent company was RMB 335 million, with a year-on-year increase of 30.94%. 2021q4 achieved an operating revenue of RMB 1.578 billion, a year-on-year increase of 8.7%, a month on month increase of 17.98%, a net profit attributable to the parent company of RMB 78 million, a year-on-year decrease of 6.92%, a month on month increase of 10.67%, and a deduction of non attributable net profit of RMB 28 million, a year-on-year decrease of 54.53% and a month on month decrease of 55.48%. In 2022q1, the operating revenue was 2.813 billion yuan, a year-on-year increase of 77%, the net profit attributable to the parent company was 150 million yuan, a year-on-year increase of 47%, and the net profit deducted from non attributable to the parent company was 143 million yuan, a year-on-year increase of 60.9%.
Comments:
The prosperity of compound fertilizer has risen, boosting the company’s performance. In 2021, the company achieved an operating revenue of 6.436 billion yuan, a year-on-year increase of 4.09%, a net profit attributable to the parent company of 425 million yuan, a year-on-year increase of 47.81%, and a net profit deducted from non attributable to the parent company of 335 million yuan, a year-on-year increase of 30.94%. In 2022q1, the operating revenue was 2.813 billion yuan, a year-on-year increase of 77%, the net profit attributable to the parent company was 150 million yuan, a year-on-year increase of 47%, and the net profit deducted from non attributable to the parent company was 143 million yuan, a year-on-year increase of 60.9%. The substantial improvement of the company’s performance mainly benefited from the prosperity of its main business. In 2021, the company’s gross profit margin was 18.27%, a year-on-year increase of 0.16pct, net profit margin was 6.42%, a year-on-year increase of 2.04pct, roe was 8.80%, and a year-on-year increase of 2.42pct. In 2022q1, the gross profit margin was 15.09%, a year-on-year decrease of 5.87pct, a month on month decrease of 2.42pct, the net profit margin was 5.32%, a year-on-year decrease of 0.97pct, a month on month decrease of 3.57pct, and the roe was 2.93%, a year-on-year increase of 0.77pct and a month on month decrease of 0.71pct. Driven by cost support and short supply, the company’s compound fertilizer business boom has improved. According to Zhuo Chuang, the average prices of the company’s main products compound fertilizer 2021 and 2022q1 are 2845 yuan / ton and 3365 yuan / ton respectively, up 21% and 42% year-on-year respectively.
Significant advantages in capacity layout and effective improvement in operation efficiency. The company’s production base covers most of the planting areas in China, which can quickly respond to the fertilizer demand of each planting area and reduce the transportation cost. In terms of period expenses, the total period expense rate of the company in 2021 was 11.61%, with a year-on-year increase of 0.27pct. Among them, the sales expense rate was 5.37%, a year-on-year decrease of 0.25pct, the management expense (including R & D expenses, comparable caliber) rate was 7.04%, a year-on-year increase of 0.6pct, and the financial expense rate was – 0.8%, a year-on-year decrease of 0.08pct. In 2022q1, the total expense rate of the company was 8.92%, a year-on-year decrease of 4.8pct. Among them, the sales expense rate was 4.41%, a year-on-year decrease of 1.69pct, the management expense (including R & D expenses, comparable caliber) rate was 5.04%, a year-on-year decrease of 3.73pct, and the financial expense rate was -0.52%, a year-on-year increase of 0.62pct.
The superposition of cost support and insufficient construction, and the price of compound fertilizer is booming. On the cost side, the rising prices of raw materials such as sulfur and synthetic ammonia, as well as the strong international demand, drove the price of monoammonium phosphate upward; Before the implementation of the export legal inspection policy, the shortage of supply superimposed on India’s release of a new round of urea bidding, and the urea market continued to be favorable; The price of potash fertilizer also increased due to short supply and blocked import. Internationally, after the conflict between Russia and Ukraine in the first quarter, Russia restricted the export of chemical fertilizer, which exacerbated the tight supply of international chemical fertilizer. The soaring price of international chemical fertilizer led to the rise of the price of chemical fertilizer in China. In terms of operation, the unit operation rate of compound fertilizer enterprises in 2021 is lower than that in 2019 and 2020. According to Baichuan, the average operation rate of compound fertilizer in 2021 is 40%, 7% lower than that in the same period last year. On the one hand, the low operating rate is due to the tight supply and high price of raw materials, the low production enthusiasm of manufacturers, and the shortage of raw materials, which makes the enterprises reduce the load or stop. On the other hand, environmental protection, safety factors, dual control of energy consumption, power restriction and other measures have hindered the commencement of some units. The highest operating rate was in April, with an operating rate of 48.65%. Under the dual effects of cost and operation, the price of compound fertilizer continues to rise. According to Zhuo Chuang information, the average prices of the company’s main products compound fertilizer 2021 and 2022q1 were 2845 yuan / ton and 3365 yuan / ton respectively, up 21% and 42% year-on-year respectively.
Join hands with Hubei Yihua Chemical Industry Co.Ltd(000422) to build iron phosphate, and the company’s business is expected to reach a new level. The company cooperates with Hubei Yihua Chemical Industry Co.Ltd(000422) to jointly invest in the construction of new energy material precursor iron phosphate and supporting facilities (including new beneficiation, sulfuric acid, phosphoric acid, purified phosphoric acid, etc.), comprehensive utilization of raffinate acid, new fertilizer and purified gypsum) by increasing capital and shares to Songzi Yihua, a wholly-owned subsidiary of Hubei Yihua Chemical Industry Co.Ltd(000422) company. According to Hubei Yihua Chemical Industry Co.Ltd(000422) announcement, Songzi fertilizer industry has an annual production capacity of Shanghai Pudong Development Bank Co.Ltd(600000) tons of diammonium phosphate. In terms of raw materials, it is equipped with 800000 tons / year of sulfuric acid, 300000 tons / year of phosphoric acid, 83000 tons / year of fluorosilicic acid and 10500 tons / year of sodium fluorosilicate. After the capital increase, Stanley Agriculture Group Co.Ltd(002588) and Hubei Yihua Chemical Industry Co.Ltd(000422) hold 35% and 65% respectively. This cooperation extends the industrial chain to the downstream, which helps both sides give full play to their respective advantages and boost the company to open up new growth space.
Profit forecast and investment suggestion: due to the company’s new 1 million ton green and efficient compound fertilizer project, we raised the profit forecast. It is estimated that the net profit attributable to the parent company from 2022 to 2024 will be 531 million yuan (formerly 504 million yuan), 620 million yuan (formerly 562 million yuan) and 747 million yuan (newly increased), and EPS will be 46 yuan, 54 yuan and 65 yuan respectively. We selected Xinyangfeng Agricultural Technology Co.Ltd(000902) , Anhui Sierte Fertilizer Industry Ltd.Company(002538) , Yunnan Yuntianhua Co.Ltd(600096) as comparable companies in the field of chemical fertilizer. The average PE of comparable companies in 2022, 2023 and 2024 was 12.91 times, 11.17 times and 8.95 times (corresponding to the closing price on April 20, 2022). The current share price corresponding to the PE of the company in 2022, 2023 and 2024 was 15.72 times, 13.45 times and 11.16 times respectively, maintaining the “buy” rating.
Risk warning: the downstream demand is less than the expected risk; The new project is less than the expected risk; Price fluctuation risk of raw materials; The data information on which it is based lags behind the risk.
