Incident: The company released its semi-annual performance forecast for 2022, and expects 22H1 to achieve net profit of 2,600 to 2,800 million yuan (+184.38% to +206.25% compared to the previous year).
The company has outstanding resource endowment advantages, and the industry is booming: the company is a leading salt gas platform company in China. Relying on its own Mabian Yanfeng phosphate mine and Hanyuan Liujiashan phosphate mine, it has formed four major business segments: alkali, diglyphosate/glyphosate, methionine, and photovoltaics, with an outstanding leading position. The reporting period benefited from a rise in the global grain and fertilizer industry against the backdrop of the Russia-Ukraine conflict and the continued increase in global emphasis on food security. Sales prices of the company's main products, diglyphosate, and ammonium chloride, rose. At the same time, in the context of China's continuous promotion of the “double carbon” target, new energy industries such as photovoltaics and lithium batteries developed rapidly, creating a high demand for the raw material soda ash. The company's soda ash products also achieved significant price increases, supporting the company's profit growth. Furthermore, relying on the unique endowment advantages of natural gas, phosphorus, salt and other resources in the Sichuan region where the company is located, the company's cost advantage continues to grow, laying a solid foundation for improving the company's profitability.
The scale advantage continues to increase, and the pace of the photovoltaic industry layout continues to expand: in terms of chemicals and agriculture, the company continues to expand its scale. According to the announcement, the company's phosphate ore development project with an annual output of 1 million tons of phosphate ore at the Mabian Yanfeng phosphate mine is expected to achieve phosphate ore sales in 2022. Furthermore, the company announced in April 2022 that it plans to invest about 125 million yuan to build a “high-tech green special intermediate project”, involving 500,000 tons/year of diglyphosate production line. In the future, as the project gradually progresses, the company is currently the largest in the world The supplier's scale advantage is expected to be further strengthened. While maintaining steady operations in the chemical and agricultural fields, in 2021, the company laid out the photovoltaic industry by investing in photovoltaic silicon wafers and photovoltaic module projects, and made it a key future development direction. Currently, it has the Chongqing 8GW photovoltaic packaging materials and products project under construction and Fuxing Technology's 10GW N+ ultra-efficient monocrystalline solar silicon project. In the future, with the gradual implementation of these projects, the company is expected to fully benefit in the current context where the current boom in photovoltaics and other new energy industries continues to rise.
Investment advice: We expect the company's net profit from 2022 to 2024 to be 4.97 billion yuan, 5.16 billion yuan, and 5.58 billion yuan respectively, giving it a buy-A investment rating.
Risk warning: demand falls short of expectations; project implementation falls short of expectations; macro environment falls short of expectations
