Event: On March 31, 2023, Chuanheng Co., Ltd. released its 2022 annual report: operating income of 3.447 billion yuan in 2022, an increase of 36.26% over the previous year; achieved net profit of 758 million yuan, an increase of 106.05% over the previous year; realized net profit of 771 million yuan after deducting non-return to the mother, an increase of 124.51% over the previous year; gross profit margin of sales was 44.93%, an increase of 7.67 pct over the previous year; operating cash flow was 544 million yuan, an increase of 580% over the previous year.
Among them, in 2022Q4, the company achieved operating income of 992 million yuan, an increase of 15.49% over the previous year, an increase of 14.15%; the net profit returned to the mother was 169 million yuan, an increase of 8.09% over the previous year, a decrease of 22.83% over the previous year; the gross profit margin of sales was 44.40%, an increase of 22.10 pct over the previous year, a decrease of 7.36 pct over the previous month; the net sales margin was 17.84%, a decrease of 0.86pct over the previous year and a decrease of 8.54pct from the previous month.
Comment:
Phosphating chemical industry is booming, and annual performance is growing rapidly
The increase in the company's performance in 2022 was mainly due to a sharp rise in the prices of the company's main products, such as calcium dihydrogen phosphate, monoammonium phosphate, and phosphate ore. According to Zhuochuang information, the average price of calcium dihydrogen phosphate in southwest China in 2022 was 4585.94 yuan/ton, an increase of 35.51% over the previous year; the average price of phosphate ore was 899 yuan/ton, an increase of 80.62% over the previous year; according to Wind, the average price of industrial grade ammonium phosphate was 6609.75 yuan/ton in 2022, an increase of 39.39% over the previous year. In 2022, the company's feed-grade calcium dihydrogen phosphate achieved revenue of 1,570 million yuan, +51.28% year on year, gross profit margin 48.92%, +20.13 pct year on year; monoammonium phosphate achieved revenue of 768 million yuan, +18.80% year on year, gross profit margin 39.35%, +13.07pct year on year; phosphate ore achieved revenue of 438 million yuan, +41.83% year on year, gross margin 65.79% year on year, +3.80% year on year.
Among them, in 2022Q4, the company achieved operating income of 992 million yuan, an increase of 15.49% over the previous year and an increase of 14.15% over the previous month; the realized net profit of the mother was 169 million yuan, an increase of 8.09% over the previous year and a decrease of 22.83% over the previous month. According to Zhuochuang information, the average price of calcium dihydrogen phosphate in southwest China in Q4 2022 was 4075.40 yuan/ton, down 5.16% year on year and 10.07% month on month; the average price of phosphate ore was 1,050 yuan/ton, up 68.63% year on year, down 1.44% month on month; the average price of industrial grade monoammonium phosphate was 6257.14 yuan/ton, up 13.11% year on year and down 5.45% month on month.
The company's sales/management/finance/R&D expenses ratio in 2022 was 1.68%/6.46%/2.38%/3.19% respectively, an increase of 0.14/1.54/0.56/1.66 pct over the previous year. Management expenses increased by 98 million yuan over the same period last year, an increase of 79.10%. The main reasons were: 1. Subsidiaries Guangxi Pengyue, Hengchang New Energy and Hengxuan New Energy increased management personnel due to operating needs, and remuneration increased accordingly; 2. Increased equity incentive expenses due to implementation of the 2022 restricted stock incentive plan; 3. The increase in mining environment restoration and treatment costs in mining areas such as small dams; 4. The increase in utility costs due to additional office areas, etc. Research and development expenses increased by 71 million yuan, an increase of 184.40% over the previous year, mainly due to increased R&D related expenses such as research on ecological restoration technology for phosphogypsum hemihydrate in open pits in large slopes and phosphoric acid experimental projects for magnesium ore production.
Profit forecast and investment rating: Affected by the decline in the prices of products such as iron phosphate, we adjusted this profit forecast. It is estimated that the company's net profit for 2023/2024/2025 will be 10.14, 12.95, and 1,671 billion yuan respectively. EPS will be 2.02, 2.58, and 3.33 yuan/share, and the corresponding PE will be 12.02, 9.41, and 7.29 times. The company has obvious advantages in phosphate ore resources, and the integrated layout of new energy sources has been gradually improved to maintain the “buy” rating.
Risk warning: risk of macroeconomic fluctuations; production capacity investment falling short of expectations; risk of fluctuating product prices; risk of fluctuations in raw material prices; future demand falling; progress of new projects falling short of expectations.