\u3000\u3 China Vanke Co.Ltd(000002) 539 Chengdu Wintrue Holding Co.Ltd(002539) )
Event:
On April 27, 2022, the company released the first quarterly report of 2022: the operating revenue of Q1 in 2022 was 5.518 billion yuan, a year-on-year increase of 87.03% and a month on month increase of 14.81%; The net profit attributable to the parent company was 465 million yuan, a year-on-year increase of 157.59% and a month on month increase of 3.10%. The net cash flow from operating activities was 583 million yuan, a year-on-year increase of 408.13% and a month on month increase of 94.98%. The gross profit margin was 15.86% (down 1.51 percentage points year on year and 0.15 percentage points month on month), and the net profit margin was 8.51% (up 2.23 percentage points year on year and 0.81 percentage points month on month).
Key investment points:
The prosperity of main products remained high, and the company’s operating performance increased steadily. In Q1 2022, the company achieved an operating revenue of 5.518 billion yuan, a year-on-year increase of 87.03% and a month on month increase of 14.81%; The net profit attributable to the parent company was 465 million yuan, a year-on-year increase of 157.59% and a month on month increase of 3.10%. Benefiting from the rise in product prices and the strong demand for fertilizer in the peak spring farming season, the company’s revenue and profit in the first quarter increased significantly year-on-year. According to wind data, in Q1 2022, the average price of chlorine based compound fertilizer was 2967 yuan / ton, a year-on-year increase of 48.40%; The average price of sulfur based compound fertilizer was 3270 yuan / ton, up 44.77% year-on-year; The average price of monoammonium phosphate was 3113 yuan / ton, up 37.69% year-on-year; The average price of soda ash was 2383 yuan / ton, up 55.94% year-on-year; The average price of yellow phosphorus was 33021 yuan / ton, a year-on-year increase of 99.00%. Affected by the dual carbon policy and dual control of energy consumption, the new capacity of monoammonium phosphate and yellow phosphorus will be limited in the future. At the same time, the problem of global food security is becoming increasingly prominent, the price of crops is rising, and the demand for phosphate fertilizer and compound fertilizer is also rising. It is expected that in the future, the prices of the company’s main products will remain high and volatile, and the company’s profitability will also remain at a high level.
In Q1 2022, the company’s sales expense ratio was 1.19%, a year-on-year decrease of 0.81 percentage points and a month on month decrease of 0.63 percentage points; The management expense ratio was 2.54%, a year-on-year decrease of 1.34 percentage points and a month on month increase of 1.93 percentage points; The financial expense rate was 0.52%, a year-on-year decrease of 1.52 percentage points and a month on month increase of 0.02 percentage points, mainly due to the decrease in the discount of notes payable in Q1 in 2022 compared with the same period last year and the decrease in the borrowing interest rate compared with the same period last year, resulting in the decrease in interest expenditure compared with the same period last year.
The construction of the project is progressing steadily, and the synergistic effect of phosphorus chemical industry and compound fertilizer is brought into full play
On December 24, 2021, the company signed the letter of intent on investment cooperation with the people’s Government of Yingcheng City, Hubei Province, and invested in the construction of “green transformation and product structure adjustment and upgrading project of salt chemical circular economy industrial chain” in Yingcheng City. It is planned to build Shanghai Pudong Development Bank Co.Ltd(600000) tons of water-soluble compound fertilizer, 400000 tons of slow and controlled-release compound fertilizer, 700000 tons of refined salt, 200000 tons of sodium bicarbonate (baking soda) and 50000 tons of melamine per year; Reconstruction and expansion of 300000 tons of sodium bicarbonate and 700000 tons of synthetic ammonia; 300000 tons of light alkali is transformed into heavy alkali. On February 2023, the company obtained the reply on the environmental impact assessment of the transformation and upgrading of circular economy products of salt chain.
The company plans to raise a total of no more than 1.996 billion yuan to invest in the construction of a joint production project of comprehensive utilization of phosphate rock resources, production of new energy materials and slow-release and controlled-release compound fertilizer. The project plans to build an annual capacity of 350000 tons of battery grade iron phosphate and Shanghai Pudong Development Bank Co.Ltd(600000) tons of slow and controlled-release compound fertilizer, as well as the front-end supporting capacity of 1.5 million tons of phosphate ore beneficiation, 1 million tons of sulfur to sulfuric acid, 300000 tons of wet process phosphoric acid (converted into pure) and 300000 tons of refined phosphoric acid and relevant supporting facilities. On March 1, 2022, the company obtained the EIA reply on the linkage production project of new energy materials and slow-release and controlled compound fertilizer by comprehensive utilization of phosphate rock resources, and the construction is expected to start in April 2022; It is estimated that the phase I 100000 t / a iron phosphate project will be completed and put into operation in March 2023, and the phase II 250000 T / a iron phosphate and related supporting projects will be completed and put into operation in December 2023. The company signed a contract with Yicheng Municipal People’s Government of Hubei Province to invest in the construction of green chemical recycling industrial park, and plans to comprehensively utilize 100000 tons of battery grade iron phosphate, 1 million tons of beneficiation, 200000 tons of wet process phosphoric acid (converted into 100% P2O5), 100000 tons of refined phosphoric acid (85% H3PO4), 800000 tons of sulfur to sulfuric acid, 800000 tons of slow and controlled release compound fertilizer and 1 million tons of phosphogypsum. The implementation of the two projects will give full play to the synergy between phosphorus chemical industry and the main business of compound fertilizer, which is not only conducive to strengthening the main business of compound fertilizer and expanding the scale of compound fertilizer industry, but also conducive to the company to grasp the development opportunity of iron phosphate industry, accelerate the formation of a complete industrial chain of “phosphate rock phosphoric acid iron phosphate”, expand the scale of the company’s phosphorus chemical industry and enrich phosphorus chemical products, and further consolidate the competitive advantage of the company’s industrial chain.
Profit forecast and investment rating: it is estimated that the net profit attributable to the parent company in 2022, 2023 and 2024 will be RMB 1.613 billion, RMB 2.212 billion and RMB 2.928 billion respectively, and the corresponding PE will be 8.45, 6.16 and 4.66 times respectively, 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.
