Performance review
1Q22 performance is in line with our expectations
Sirte announced 1Q22 results: revenue of 1.434 billion yuan, an increase of 86.51% over the same period last year; net profit of 154 million yuan, corresponding to 0.18 yuan per share, an increase of 70.5% over the same period last year, which is in line with our expectations The substantial increase in 1Q22 performance is mainly due to the sharp rise in prices and sales of chemical fertilizer products such as monoammonium phosphate. According to Baichuan Information, the average market price of monoammonium phosphate in 1Q22 rose 41% compared with the same period last year, and the average prices of chlorine-based and sulfur-based compound fertilizers rose 49% and 42% respectively. 1Q22 deducted 136 million yuan in non-net profit, an increase of 68.0 percent over the same period last year, and the net cash flow of operating activities was 172 million yuan, an increase of 168 percent over the same period last year.
The profit margin of 1Q22's main business was 20.8%, a decrease in 5.6/5.9ppt compared with the previous month, mainly due to the increase in compound fertilizer sales and the increase in raw material costs.
Trend of development
Be optimistic about the prosperity of phosphate fertilizer industry, phosphate fertilizer prices and profits are expected to remain high. The high prices of major global food products and food supplies continue to improve fertilizer demand; on the supply side, we expect less new global phosphate fertilizer capacity in the next few years. Under the situation that the price of agricultural products remains high, we expect that the supply and demand of phosphate fertilizer is expected to remain tight, and the prosperity of the phosphate fertilizer industry is expected to continue. At the same time, after the implementation of the legal inspection policy for domestic chemical fertilizer exports, the amount of phosphate fertilizer exported overseas has declined significantly compared with the same period last year, and overseas phosphate fertilizer prices have risen sharply. The current export monoammonium phosphate FOB price is 1089 US dollars / ton, and the rise in overseas fertilizer prices has led to a substantial increase in export profits. At the same time, the rising prices of raw materials such as sulfur and synthetic ammonia support the domestic price of phosphate fertilizer to maintain a high level. at present, the price of monoammonium phosphate is 3700 yuan / ton. as the company's phosphate fertilizer business industrial chain is relatively perfect, we expect domestic sales profits to be at a good level.
We will explore and distribute new energy industries and promote industrial transformation and upgrading. At present, the company's Mingniwan Mine has an annual production capacity of 800000 tons; Yongwen Phosphate Mine has an annual production scale of 3 million tons approved by the mining license, which is currently in the stage of planning and design, and its mining area belongs to the rich mining area of high-grade and high-quality phosphate rock in China. Based on the rich phosphate rock resources, the company will speed up the layout of the phosphorus chemical industry, take the initiative to enter the supporting field of new energy chemical production, and promote business transformation and upgrading.
Profit forecast and valuation
We maintain the 2022 profit forecast of 530 million yuan and introduce the 2023 profit forecast of 544 million yuan. At present, the company's stock price corresponds to the price-to-earnings ratio of 12.0 and 11.7x in 2022. Due to the sharp decline in the valuation of iron phosphate plates, we have lowered our target price by 36.7% to 9.5 yuan, corresponding to a 27% upside and a price-to-earnings ratio of 15.3% 12.5x in 2022 / 23 to maintain an outperforming industry rating.
Risk.
The price of monoammonium phosphate declined, and the export volume of monoammonium phosphate was lower than expected.
