\u3000\u30 China Baoan Group Co.Ltd(000009) 02 Xinyangfeng Agricultural Technology Co.Ltd(000902) )
Event:
1. The company released its annual report for 2021, realizing an operating revenue of RMB 11.802 billion in 2021, with a year-on-year increase of 17.21%; The net profit attributable to the parent company was 1.21 billion yuan, a year-on-year increase of 28.22%.
2. The company released its report for the first quarter of 2022, realizing an operating revenue of 4.545 billion yuan, a year-on-year increase of 37.25%, and a net profit attributable to the parent company of 407 million yuan, a year-on-year increase of 24.14%.
With the rise of grain prices and the boom of planting in the lower reaches, the new compound fertilizer is expected to continue to grow at a high speed
In 2021, the Shenzhen Agricultural Products Group Co.Ltd(000061) prices of corn and other crops remained high, farmers’ income from growing grain was high, and their planting enthusiasm was strong. The consumption capacity of brand agricultural materials products in the new planting season was significantly improved. In 2021, the company’s revenue from conventional compound fertilizer and new compound fertilizer maintained growth, of which the sales volume of new compound fertilizer increased by more than 25%, the price increased by 14%, and the gross profit margin reached 24.22%, an increase of 1.77 PCT over the same period last year. The sales volume of new fertilizer increased from 335600 tons in 2016 to 903400 tons in 2021, an increase of 169% in five years and a compound annual growth rate of 22%. In 2021, the company’s R & D expenses reached 77.24 million, with a year-on-year increase of 32%. The company increased R & D investment, especially the R & D of new fertilizer, so as to lay a foundation for the improvement of profitability in the future. The company has product, channel and cost advantages in phosphate and compound fertilizer business. With the continuous boom of Shenzhen Agricultural Products Group Co.Ltd(000061) price in China, the company’s compound fertilizer performance is expected to usher in sustained high growth, profitability is expected to continue to improve, and it also brings sufficient cash flow support to the company.
In the first quarter of 2022, the company maintained a sustained high growth in revenue under the impact of the epidemic. Affected by the epidemic situation in Northeast China dominated by Jilin, the transportation and sales of compound fertilizer of the company lagged behind in the first quarter. We expect the sales revenue of such products to be reflected in April. In addition, affected by the previous rapid rise in the price of raw materials of compound fertilizer, the dealers’ goods preparation lagged in the second half of 2021. At present, the inventory of compound fertilizer channels is low. It coincides with the peak season of spring ploughing, and the dealers’ enthusiasm for taking goods is expected to be released, driving the company’s sales of compound fertilizer in the second quarter.
The company is rich in phosphorus resources, and the layout of new energy is expected to create a new profit growth pole for the company
The company has 1.85 million tons of monoammonium phosphate (including 150000 tons / year of industrial grade monoammonium phosphate). The phosphate rock of the major shareholder is expected to be injected successively in the future. Under the high demand increment brought by lithium iron phosphate, the value of the company’s whole phosphorus resources will increase. In 2021, the company established Yangfeng Chuyuan New Energy Technology Co., Ltd., a wholly-owned subsidiary, and successively invested and built iron phosphate production bases in Zhongxiang, Hubei and Yidu, Hubei. It is expected to invest 6 billion yuan to build 300000 tons of iron phosphate, 150000 tons of lithium iron phosphate and related supporting projects. The company’s iron phosphate projects are mostly bundled with downstream customers, which is expected to seize the first opportunity in sales. Among them, the 50000 ton iron phosphate project in phase I of the 200000 ton / year iron phosphate project (and upstream supporting projects) located in Zhongxiang, Hubei Province, has started single machine trial production in April this year, and is expected to release profits from May this year. The new energy business makes full use of the company’s resources and regional advantages in phosphorus resources, gives full play to the high synergy with the existing phosphate rock and phosphate compound fertilizer business, consolidates the company’s leading advantage in the phosphorus chemical industry, improves the comprehensive profitability, and is expected to create a new performance growth pole for the company.
Optimistic about the company’s long-term development prospects, give a “buy” rating: considering the rise in the price of raw materials and compound fertilizers and the change in the rhythm of the company’s new energy business, we adjust the profit forecast: we expect that the company’s EPS will be 1.3/1.7/2.1 yuan from 2022 to 2024 (the previous value is 1.38/1.99 from 2022 to 2023), and the profit year-on-year growth rate will reach 38.52% / 30.65% / 23.45%, which corresponds to only 14 / 11 / 9 times of PE. Give a “buy” rating and continue to recommend!
Risk warning: Shenzhen Agricultural Products Group Co.Ltd(000061) and price fluctuation of raw materials; Policy risk; Limitations of cost calculation; Intensified competition
