\u3000\u3 China Vanke Co.Ltd(000002) 312 Sichuan Development Lomon Co.Ltd(002312) )
Event:
On April 28, 2022, the company released the first quarterly report of 2022: the operating revenue of Q1 in 2022 was 2.329 billion yuan, an increase of 64.06% year-on-year and 22.19% month on month; The net profit attributable to the parent company was RMB 273 million, with a year-on-year increase of 145.70% and a month on month increase of 123.77%. The net cash flow from operating activities was RMB 262 million, with a year-on-year increase of 393.67% and a month on month increase of 170.10%. The weighted average return on net assets was 3.90%, an increase of 1.04 percentage points year-on-year and 2.10 percentage points month on month. The gross profit margin was 20.59% (with a year-on-year increase of 2.84 percentage points and a month on month decrease of 0.64 percentage points), and the net profit margin was 11.74% (with a year-on-year increase of 3.93 percentage points and a month on month increase of 5.35 percentage points).
Key investment points:
The prosperity of products remained high, and the company’s operating performance increased steadily
The company achieved an operating revenue of RMB 2.329 billion in Q1 of 2022, with a year-on-year increase of 64.06% and a month on month increase of 22.19%; The net profit attributable to the parent company was RMB 273 million, with a year-on-year increase of 145.70% and a month on month increase of 123.77%. In the first quarter of 2022, the prices of the company’s main products, such as industrial grade monoammonium phosphate and fertilizer, increased significantly year-on-year, driving the revenue and profit. According to wind data, in Q1 of 2022, the average price of industrial grade monoammonium phosphate was 621167 yuan / ton, an increase of 50.63% year-on-year and 6.22% month on month; The average price of feed grade dicalcium phosphate was 316439 yuan / ton, an increase of 73.96% year-on-year and a decrease of 12.02% month on month; The average price of fertilizer grade monoammonium phosphate was 311317 yuan / ton, with a year-on-year increase of 37.69% and a month on month decrease of 0.40%. While the product price is rising, the prices of the company’s main raw materials such as phosphorus ore, sulfur, sulfuric acid, liquid ammonia, urea and potassium chloride also show an upward trend. Deyang and Xiangyang bases of the company are rich in phosphate rock resource allocation. At the same time, the two bases are equipped with 900000 tons of sulfuric acid and 100000 tons of synthetic ammonia. Under the background of drastic fluctuations in the price of raw materials, the company still maintains its advantages in the integrated industrial chain. Affected by geopolitical factors, global food prices have risen, and the vigorous development of new energy industry has driven the demand for industrial grade monoammonium phosphate. At present, the prices of the company’s industrial grade monoammonium phosphate, fertilizer and other products are still in the upward stage. Relying on the advantages of supporting resources, the company’s profitability is expected to continue to increase.
The company continued to strengthen cost reduction and cost control. In Q1 2022, the company’s sales expense ratio was 0.83%, a year-on-year decrease of 0.52 percentage points and a month on month increase of 0.09 percentage points; The management expense ratio was 2.77%, down 1.15 percentage points year-on-year and 4.22 percentage points month on month; The financial expense rate was 0.23%, a year-on-year decrease of 0.49 percentage points and a month on month decrease of 0.33 percentage points.
Acquire Tianrui mining to improve the self-sufficiency of phosphate rock
The company plans to issue shares to Sichuan Advanced Materials Industry Investment Group Co., Ltd. and Sichuan Salt Industry Corporation to purchase 80% and 20% equity of Sichuan development Tianrui Mining Co., Ltd. respectively. After the transaction is completed, Tianrui mining will become a wholly-owned subsidiary of the company. On April 20, 2022, the company has completed the reply to the notice of the CSRC on the first feedback on the examination of administrative licensing projects (No. 220395). The retained resource reserves of Tianrui mining area are 87.419 million tons, and the approved production scale is 2.5 million tons / year of phosphorus ore; At the same time, it is equipped with beneficiation device, with a recorded production scale of 1.15 million tons of concentrate / year, and the design capacity of the selected raw ore is about 2 million tons / year. It is a phosphate rock enterprise with the largest reserves and the largest approved mining capacity in Mabian area. At present, Hongxing Phosphate Mine in Xiangyang base of the company has reached the end of mining, and about 150000 tons of phosphate rock can still be mined every year. At the same time, Baizhu Phosphate Mine in Xiangyang base has an annual output of 1 million tons of phosphate ore, which has been put into operation, and the feed grade calcium hydrogen phosphate ore in Xiangyang base has basically realized self supply after reaching the production capacity. After the acquisition of Tianrui mining, the company will have an annual phosphate production capacity of 3.65 million tons. At that time, the company’s phosphate self-sufficiency will be significantly improved, and its economic benefits and integration advantages will be further highlighted.
The new energy materials project has been continuously promoted, and the integrated layout of the industrial chain has been continuously improved
Relying on the advantages of lithium iron phosphate ore and ammonium phosphate industry, the company will continue to develop high-quality iron phosphate materials. The construction of the project has been officially approved by Deyang Zhidian, and the project has been officially approved as the key project of Deyang Xindian Industrial Park, and the project has been officially approved by Deyang Zhidian, and the project has been listed as the key project of Deyang Xindian Industrial Park; At the same time, the company orderly promoted the lithium battery new energy material project in Panzhihua. Lithium iron phosphate is the downstream product of the company’s existing phosphorus chemical product industrial monoammonium phosphate. The company’s output of industrial monoammonium phosphate is more than 360000 tons, which is the largest industrial monoammonium phosphate production enterprise in the world. After the acquisition of Tianrui mining, the company will have an annual phosphate rock production capacity of 3.65 million tons. With the help of phosphate rock resource advantages, the company will effectively give play to Industrial Synergy and improve the profitability of the project.
Profit forecast and investment rating: Based on the principle of prudence, the impact of acquisition on its performance is not considered temporarily. It is estimated that the net profit attributable to the parent company in 2022, 2023 and 2024 will be 968, 1088 and 1653 million yuan respectively, and the corresponding PE will be 22.12, 19.68 and 12.95 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; The uncertainty of the company’s acquisition process.
