Main points of investment

The high degree of self-sufficiency of phosphate rock and electricity will provide conditions for the company's sustained growth in performance. Chengxing Co., Ltd. is the largest manufacturer of fine phosphorus chemical products in China, with more than 130 million tons of phosphate ore reserves and power supply for yellow phosphorus production. Recently, there is a general shortage of power supply across the country, and the implementation of the power restriction policy for high energy consumption products will lead to underproduction of yellow phosphorus, prices will also rise to a certain extent, and the profitability of enterprises with high power self-sufficiency will be significantly improved.

Phosphorus chemical products with higher economic added value provide stable growth for the company's performance. The company's 700000 tons of phosphoric acid are all up to the standard of food acid, of which 120000 tons can be used as electronic acid. at present, the operating rate of phosphoric acid has reached 80%. In addition, the company's 65000 tons / year calcium phosphate technical renovation project will also be completed in the near future, and the downstream production capacity of the products will continue to increase. The release of this new production capacity will not have a great impact on product prices, and the company's profitability will also be further improved due to scale effects. In the future, the company will still take the high precision and cutting edge of fine phosphorus chemical products as the development direction, taking advantage of the opportunity of international medium and low-end phosphorus chemical production capacity transfer to occupy the domestic related product market.

Comprehensive evaluation and rating adjustment:

With the improvement of national management of phosphate rock resources, the price of phosphate rock rises. In addition, the release of the company's new calcium phosphate production capacity will further improve profitability due to economies of scale. It is estimated that the EPS in 2011 and 2012 will be 0.27,0.46 yuan. The company's recoverable phosphate ore reserves are huge and may exceed the current exploration reserves, and the corresponding phosphate ore resource assets make the current share price a high margin of safety, giving it a "buy" rating.

Risk Tips:

After the introduction of resource tax, the price of yellow phosphorus is still low due to the lack of closure of small and medium-sized yellow phosphorus enterprises.