\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 141 Hubei Xingfa Chemicals Group Co.Ltd(600141) )
Key investment points:
On April 28, 2022, the company released the first quarterly report of 2022. In the first quarter, the operating revenue was 8.575 billion yuan, a year-on-year increase of 90.65%; The net profit attributable to the shareholders of the listed company was 1.723 billion yuan, a year-on-year increase of 384.07%; The net profit attributable to shareholders of listed companies after deducting non recurring profits and losses was 1.717 billion yuan, a year-on-year increase of 389.60%.
The prices of main products rose sharply year-on-year, and the performance of the company increased sharply in the first quarter. In 2022q1, the chemical industry generally continued the business cycle since 2021, and the sales prices of the company’s main products glyphosate, yellow phosphorus, phosphate fertilizer, dimethyl sulfoxide and other products continued to maintain a high level. In 2022q1, the prices of phosphate rock, yellow phosphorus, industrial grade sodium tripolyphosphate, food grade sodium tripolyphosphate, industrial grade sodium hexametaphosphate, food grade sodium hexametaphosphate, ammonium phosphate, organosilicon and glyphosate increased year-on-year by 89.87%, 96.76%, 44.38%, 88.51%, 47.61%, 83.47%, 50.37%, 44.88% and 202.41% respectively. The rise of product prices promoted the substantial growth of the company’s revenue. In terms of profitability, the company’s gross profit margin in the first quarter was 35.91%, up 14.15 percentage points year-on-year and down 7.42 percentage points month on month; The net interest rate was 24.72%, up 16.16 percentage points year-on-year and down 3.58 percentage points month on month. The profitability of the company decreased month on month in the first quarter, which is expected to be related to the month on month decline of Q1 prices of some products.
The subsidiary plans to acquire 51% equity of Xingxing Lantian and improve the layout of phosphate fertilizer industry chain. Yidu Xingfa, a wholly-owned subsidiary of the company, plans to acquire 51% equity of Yichang xingxinglantian held by Yichang Xingfa, the controlling shareholder of the company, in cash at a transaction price of 259140600 yuan. After the completion of this transaction, Xingxing Lantian will become a wholly-owned subsidiary of the company. This transaction is conducive to improving the company’s phosphate fertilizer industry chain. Xingxinglantian has a capacity of 400000 tons / year of synthetic ammonia. Synthetic ammonia is an important raw material for the production of phosphate fertilizer. After holding xingxinglantian, the company will further enhance the guarantee capacity of raw materials. In addition, affected by the continuous improvement of downstream demand, the price of synthetic ammonia has maintained an upward trend in recent years, which has continuously enhanced the profitability of Xingxing Lantian. This acquisition is conducive to improving the operating performance of the company.
A number of projects have been steadily promoted, which is conducive to the expansion of the company’s scale. In terms of phosphate rock, the 2 million T / a mining project of Houping phosphate rock under construction by the company is planned to be completed and put into operation in the second half of 2022. In terms of glyphosate, Inner Mongolia Xingfa is currently building a glyphosate production capacity of 50000 tons / year, which is planned to be put into operation in the second quarter of 2022. At that time, the glyphosate production capacity of the company will increase to 230000 tons / year. In terms of silicone, the 400000 T / a silicone monomer production plant under construction by Inner Mongolia Xingfa, the company’s holding Sun company, is planned to be completed and put into operation in June 2023. In terms of electronic chemicals, Xingfu electronics is currently building a 40000 t / a IC sulfuric acid project, which is planned to be put into operation by stages before the first half of 2022. In addition, the company has established a joint venture with Zhejiang Huayou Cobalt Co.Ltd(603799) to invest in the construction of 300000 t / a iron phosphate project, which will be constructed by stages. The 100000 t / a iron phosphate project in phase I of the project is expected to be put into operation by the end of 2022.
Investment suggestion: in 2022, the prices of the company’s main products yellow phosphorus and fine phosphorus chemical products, glyphosate and silicone related products are relatively strong. We believe that the new production capacity of yellow phosphorus and glyphosate is limited in the future, and the prosperity of the industry is expected to be maintained. At the same time, the steady progress of the company’s projects under construction and the gradual release of subsequent new production capacity are conducive to the company’s scale effect. The company raised the company’s basic earnings per share from 2022 to 2023 to 4.36 yuan and 4.56 yuan. The current share price corresponds to 7.23 times and 6.92 times of PE, maintaining a cautious recommendation rating.
Risk warning: industry competition intensifies the risk; Risk of weakening downstream demand; Risk of falling product price and price difference; Risk that the progress of projects under construction and proposed projects is less than expected; Natural and man-made disasters and other force majeure events.
