Event
The company issues its 2022 half-yearly report. In the first half of 2022, the company achieved an operating income of 11.115 billion yuan, an increase of 18.89% over the same period last year, and a net profit of 1.665 billion yuan, an increase of 129.34% over the same period last year.
Comment
The prices of chemical fertilizers and chemicals are strong, and profits hit new highs. In the chemical fertilizer sector, the average spot price of urea in the first half of 2022 was 2936.7 yuan / ton, up 32.6% from the same period last year; the average spot price of diamine phosphate was 3778.7 yuan / ton, up 30.34% from the same period last year. In the chemical sector, the average market price of PVC in the first half of 2022 was 8616.6 yuan / ton, up 1.97% from the same period last year; and the average price of caustic soda was 1146.9 yuan / ton, up 141.2% from the same period last year. Under the integrated layout, the company enjoys the benefits of the whole industry chain, the superimposed company optimizes procurement and management, and the profit in the first half of the year reaches an all-time high.
The boom of chemical fertilizer and chlor-alkali is expected to continue, and the moat of resources is deeply cast. First of all, global inflation is still high, and rising commodity prices raise the cost center of chemical fertilizer; second, the COVID-19 epidemic and the conflict between Russia and Ukraine affect international food trade, and risk aversion demand may stimulate countries to increase grain acreage, thereby increasing the demand for chemical fertilizer. Thirdly, synthetic ammonia, phosphorus chemical industry, calcium carbide and caustic soda are all high energy-consuming industries, and the supply-side reform in the early stage has accelerated the clearing of production capacity. at present, strict supervision makes it difficult to have a significant increase in supply and demand, and the chemical fertilizer and chlor-alkali industry is expected to continue to flourish. In terms of resources, Jiangjiadun Mining, which the company has a stake in, has phosphate rock reserves of 130 million tons, and now has an output of 300000 tons, and another 1.5 million tons of mining licenses are being processed, which has a significant advantage in phosphate resources. The company's existing diammonium phosphate, urea and PVC production capacity are 1.26 million tons, 1.56 million tons and 840000 tons respectively. The superposition of resources and production capacity will fully benefit from the current round of industry prosperity.
The new energy business is developing at the same time, and the transformation and upgrading is accelerating. First of all, the company held hands in the Ningde era to establish Bang Popularization New Materials, and in 2022, the company further increased the capital of Bang Popularization New Materials with 100% equity interest in Jiangjiadun Mining, in order to speed up the production capacity construction of 300000 tons of ferric phosphate and 200000 tons of nickel sulfate. secondly, it is proposed to increase the capital of Stanley's new materials by 699.3 million yuan to carry out iron phosphate and supporting projects; in addition, to increase capital to Bang Popularization of environmental protection and degradation of new materials. With the accelerated infiltration of new energy vehicles around the world, the proportion of lithium iron phosphate batteries continues to increase, and the company will speed up its transformation and upgrading and will fill the wing of new energy.
Investment suggestion
As the industry is expected to continue to thrive, we have raised our profit forecast. Based on the closing price on August 25, it is expected that the EPS of the company in 2022 and 2023 will be 3.14, 4.19 and 4.56 respectively, and the corresponding PE will be 4.20 times that of 6.11, respectively. Combined with the high prosperity of the industry and the release of the company's future production capacity, we are optimistic about the development of the company. Maintain the "highly recommended" rating.
Risk hint
Upgrading of safety and environmental protection policies, rising prices of raw materials and electricity, changes in battery technology, and so on.