The non-net profit deducted in 2021 was 853 million yuan, an increase of 29.53% over the same period last year. The company announced that total operating income in 2021 was 13.457 billion yuan, an increase of 28.03 percent over the same period last year; net profit was 1.498 billion yuan, up 100.89 percent over the same period last year; net profit after deducting non-return was 853 million yuan, up 29.53 percent from the same period last year; and basic earnings per share was 0.32 yuan, compared with 0.16 yuan in the same period last year. It is proposed to pay a dividend of 0.155 yuan per share (including tax), with a dividend rate of 48%.

The industry is booming, and the increase in product prices leads to an improvement in performance. In terms of products: 1) the urea output of the company in 2021 was 2.029 million tons, down 22.58% from the same period last year; sales volume was 1.988 million tons, down 22.54% from the same period last year; the average selling price was 2190 yuan / ton, up 38.58% from the same period last year; sales revenue was 4.353 billion yuan, up 7.3% from the same period last year; gross profit margin was 26.12%. 2) in 2021, the company's phosphate and compound fertilizer output was 975000 tons, up 6.55% from the same period last year; sales volume was 972000 tons, down 1.19% from the same period last year; the average selling price was 2896 yuan / ton, up 35.34% from the same period last year; the sales revenue was 2.815 billion yuan, up 33.7% from the same period last year; and the gross profit margin was 13.86%. 3) in 2021, the company's methanol output was 1.398 million tons, down 10.50% from the same period last year; sales volume was 1.367 million tons, down 11.27% from the same period last year; the average selling price was 2351 yuan / ton, up 55.28% from the same period last year; the sales revenue was 3.213 billion yuan, an increase of 37.8% over the same period last year; and the gross profit margin was 34.85%. In 2021, a total of 164000 tons of urea and 120000 tons of diammonium phosphate were exported. In 2021, the COVID-19 epidemic continued to impact the global industrial chain, and the price of the chemical fertilizer industry rose to the highest point in nearly a decade, driving the company's performance.

The construction progress of the acrylonitrile project has reached expectations, and the layout of the new materials industry has continued to advance. On the basis of stabilizing the existing chemical fertilizer production capacity, the company clearly laid out the chemical new materials industry and invested in the construction of acrylonitrile projects. The construction content includes 200,000 tons / year acrylonitrile (AN) plant, 70,000 tons / year methyl methacrylate (MMA) and 214,000 tons / year waste acid recovery (SAR) plant, with a total investment of 2.78 billion yuan. The project has been under construction since July 2020, and the overall construction progress has reached expectations. At present, the pre-sale of products has been licensed for the operation of acrylonitrile hazardous chemicals. In addition, focusing on the utilization of rich CO2 natural gas resources, the company actively seeks key technical cooperation and reaches strategic cooperation with BASF and China's Fifth Ring Road. In the future, the company will also carry out technical cooperation around the conversion and efficient utilization of CO2-rich natural gas and the extension of the downstream industry chain of acrylonitrile to study and explore new project opportunities.

Profit forecast and investment rating. We estimate that the net profit of the company from 2022 to 2024 is 15.76 (+ 57.27%), 16.76 (newly introduced) and 1.837 billion yuan respectively, and the corresponding EPS is 0.34,0.36 and 0.50 yuan respectively. With reference to the valuation of the comparable company, it is given 8 times PE in 2022, corresponding to the target price of RMB2.74, and the corresponding target price is HK $3.26 at the exchange rate of Hong Kong dollar to RMB0.84 (the previous target price is HK $2.40, corresponding to 10 times PE,+35.69% for 21 years), with an "better than the market" rating.

Risk hint. Product prices and sales volume are lower than expected, safety and environmental protection risks, macroeconomic downturn.