Performance review
1H22's performance exceeded our expectations.
Sirte announced 1H22 results: revenue of 2.991 billion yuan, an increase of 39.1% over the same period last year; net profit of 491 million yuan, an increase of 94.6% over the same period last year, corresponding to a profit of 0.58 yuan per share, which exceeded our expectations, mainly due to a substantial increase in profit margin of monoammonium phosphate. 1H22 deducted 471 million yuan in non-net profit, an increase of 107.5% over the same period last year.
Due to the rising prices of phosphate rock, sulfur and other raw materials, the price of monoammonium phosphate continues to rise, the company has phosphate rock, pyrite and other resources, the integrated industrial chain is relatively perfect, the export price of superimposed monoammonium phosphate has increased significantly, the price and profit of monoammonium phosphate of the company have increased significantly, the revenue of monoammonium phosphate of 1H22 company has increased by 64.2% to 1.293 billion yuan compared with the same period last year, and the gross profit margin has increased 13.73ppt compared with the same period last year. 1H22's revenue from three-yuan compound fertilizer increased 39.78% year-on-year to 1.42 billion yuan. Due to the rise in raw material prices, the gross profit margin of compound fertilizer fell 2.21ppt to 18.13% year-on-year. In the first half of 2022, Mawei Mountain Pyrite Mine mined 49600 tons of pyrite and sold 27300 tons of pyrite.
2Q22's revenue was 1.558 billion yuan, an increase of 12.7%, 8.7%, and a net profit of 337 million yuan, and an increase of 108.1%, 118.2% compared with the previous month. Due to the rise in the price of monoammonium phosphate industry chain and the increase in export profit of monoammonium phosphate, 2Q22's gross profit margin increased by 4.4/9.0ppt compared with the previous month.
Trend of development
Phosphate rock and phosphate fertilizer boom is expected to continue, improve the industrial chain to enhance profitability. According to Baichuan information, the current price of phosphate rock in Guizhou and Hubei is between 990 and 1100 yuan per ton, and the price of phosphate ore is at a historically high position. As the demand of new energy materials such as lithium iron phosphate increases, and the supply side is affected by events such as safety inspections, and some enterprises are reluctant to sell, leading to tight supply, we believe that phosphate rock landscape is expected to continue. In terms of phosphate fertilizer, the prices of downstream agricultural products maintain the boom and overlay the cost-end raw material price support, and we are optimistic that phosphate fertilizer prices are expected to remain high. The mining scale of phosphate ore in Guizhou Lufa, a wholly owned subsidiary of the company, is 800000 tons / year. The phosphate rock mined is mainly supplied by the phosphate fertilizer production company, and some of the phosphate ores are sold to the outside world. At the same time, the construction of Yongwen Mine in Guizhou Lufa in 3 million / year (the comprehensive grade of phosphorus is more than 30%) is under design and approval procedures. The company announcement will be sent to the State Mine Safety Supervision Bureau for review in the near future, and will immediately enter the construction stage after approval. At the same time, the company has an annual production scale of 380,000 tons of pyrite and kaolin. The company has the matching of upstream resources such as phosphate rock and pyrite, and the industrial chain is relatively perfect, which will further enhance the profitability of phosphate fertilizer.
Profit forecast and valuation
Due to the substantial increase in monoammonium phosphate earnings, we raised the 2022 Universe earnings forecast for 23 years 58% 31% to 835 million yuan and 712 million yuan, and the company's share price corresponds to the price-to-earnings ratio of 10.5 Universe 12.3x for 2022 Universe. We raised our target price by 26.3% to 12 yuan, corresponding to a 17.1% upside and a price-to-earnings ratio of 12.3% to 12.1x in 2022 Universe in 23, maintaining an outperforming industry rating.
Risk.
The price of monoammonium phosphate declined, and the export volume of monoammonium phosphate was lower than expected.
