Event description
On October 26, Chuanheng Co., Ltd. released its quarterly report for 2022. The company realized operating income of 2.456 billion yuan in the first three quarters, an increase of 46.93% over the same period last year. It realized net profit of 589 million yuan, an increase of 178.13% over the same period last year. It realized deduction of non-net profit of 612 million yuan, an increase of 214.25% over the same period last year. Basic earnings per share was 1.20 yuan per share, an increase of 173.67%.
The prices of major products have declined, and the company's third-quarter results are under short-term pressure. In the first three quarters of 2022, the company realized operating income of 2.456 billion yuan, an increase of 46.93 percent over the same period last year, and a net profit of 589 million yuan, an increase of 178.13 percent over the same period last year. In a single quarter, 2022Q3 realized operating income of 869 million yuan, up 30.56% from the same period last year, down 11.15% from the previous year; and realized net profit of 219 million yuan from the same period last year, up 103.98% from the same period last year, down 17.95% from the previous year. The price of feed-grade calcium hydrogen phosphate and monoammonium phosphate of the company's main products declined in the third quarter, mainly due to the lack of support at the cost end due to the sharp drop in the prices of raw materials such as sulfur and sulfuric acid, and the slow start of fertilizer preparation at the demand end in autumn, the market demand was weak; while phosphate rock due to the non-renewable attribute of resources superimposed part of the mining shutdown, prices remain strong, contributing to the company's profits. As of October 28, the average price of feed-grade calcium hydrogen phosphate was 3077 yuan / ton, down 16.61% from the second quarter; the average price of monoammonium phosphate was 2943 yuan / ton, down 28.64% from the previous month; and the average price of phosphate rock was 1043, an increase of 25.07%.
On April 16, 2022, the company plans to finance a new 2.5 million tons / year mining project for Jigongling Phosphate Mine, with a project construction period of 4 years. On June 13, 2022, the company announced that the mining depth of the Xiaoba phosphate mine held by Fulin Mining increased by 300 meters, the phosphate ore reserves increased, and the production scale increased from 500,000 tons / year to 800,000 tons / year. At present, the company has 2.8 million tons / year production capacity of Xiaoba and Xinqiao phosphate mine, and the long-term production capacity will be 1030 million tons / year. On September 15, the company announced that the acquisition of Fuquan Phosphate Mine had been completed and the change of property rights had been registered. The expansion of phosphate rock capacity helps to improve the control and guarantee ability of phosphate rock resources upstream of the production base, and brings greater advantages for the production of downstream phosphorus chemical products of the company.
Non-public offering shares to build a number of projects, new energy materials accelerated landing on September 30, the company announced that the non-public offering of no more than 100 million shares, raising funds not more than 3.529 billion yuan, of which 1.201 billion yuan for "medium and low grade phosphate rock comprehensive utilization production of 120000 tons / year food grade phosphoric acid project", 609 million yuan for "100,000 tons / year food grade phosphoric acid purification project" 719 million yuan for "Jigongling phosphate mine new 2.5 million tons / year mining project", 200 million yuan for supplementary working capital, 800 million yuan for repayment of bank loans. This construction project will further expand the company's phosphate mining capacity, expand the company's phosphoric acid purification capacity, improve the comprehensive utilization efficiency of medium and low-grade phosphate ores, enrich the product structure of phosphorus chemical plate, and improve the layout of the company in the new energy industry chain. The company continues to distribute new energy materials such as iron phosphate, lithium hexafluorophosphate and lithium iron phosphate, and has signed cooperation agreements with the people's governments of Fu'an and Weng'an with a total investment of 17 billion yuan. the production lines of 1.6 million tons / year battery iron phosphate and 200,000 tons / year battery grade iron phosphate, 20,000 tons / year lithium hexafluorophosphate and 100000 tons lithium iron phosphate will be built in the long term. In addition, the company's iron phosphate project for 100kt/a batteries was successfully put into operation on September 16. Based on the advantages of its own phosphorus source, the company actively grasps the development opportunities of the new energy materials industry, and is expected to build the new energy materials into the company's second growth curve in the future, bringing new profit increments for the company.
Investment suggestion
It is estimated that the company's net profit from 2022 to 2024 will be 8.64,12.66 and 1.83 billion yuan respectively, with year-on-year growth rates of 135.0%, 54.4% and 42.4%. The corresponding PE was 12, 8 and 6 times, respectively.
Maintain a "buy" rating.
Risk hint
(1) the risk that the project production schedule is not as expected.
(2) the risk that the project approval progress is not as expected.
(3) the risk of a sharp fall in product prices.
(4) the risk of large fluctuations in raw material prices.
(5) the risk that the downstream demand is lower than expected.