Performance summary: in 2015, the company achieved operating income of 3.928 billion yuan, down 17.63% from the same period last year; realized net profit of 55.44 million yuan belonging to shareholders of listed companies, turning losses into profits over the same period last year; and basic earnings per share of 0.09 yuan.
The performance is in line with expectations and profitability has improved significantly. The company's operating income fell 17.63% in 2015 compared with the same period last year, mainly due to a decrease in trading business and an increase in the proportion of revenue from own products, because of the high gross profit margin of its own products, the company's comprehensive gross profit margin increased by 6.62 percentage points to 11.26% in 2015 compared with 2014. In terms of product revenue, urea gross profit margin increased by 13.28 percentage points year-on-year to 22.03%; compound fertilizer revenue increased by 78.74% year-on-year, and gross profit margin increased by 2.75% year-on-year to 10.67%. In addition, Mianyang Industrial Park has been officially put into production, the new production capacity began to increase the performance of the company, melamine and other products extend the urea industry chain, improve the added value of products, and the company's profitability has been greatly improved.
The clean energy LNG business is progressing steadily and is expected to contribute profits in 16 years. The clean energy LNG project is a key project for the company's transformation and upgrading. At present, the Qianzhong project is progressing smoothly and will be completed in 2016 and contribute profits. On the other hand, the price reduction and continuous marketization of natural gas for non-residential use will also significantly enhance the price competitiveness of LNG clean energy. The company has the background of China Petroleum & Chemical Corp's major shareholder, is determined to enter the energy industry, strives to plan channel construction, vigorously promotes the market application of clean energy, has a clear strategic thinking on the layout of clean energy, and cultivates new economic growth points.
Look forward to automotive urea power, reduce costs and costs to promote performance. Vehicle urea is a consumable that must be used in SCR technology, and the average consumption is generally 3-5% of diesel fuel consumption, which is used to reduce exhaust pollutant emissions from diesel engines. At present, the automotive urea industry in China is still in its infancy, and the market is relatively chaotic, resulting in the performance of automotive urea in the past 15 years slightly lower than expected. However, as the only state-owned listed company in the industry, Sichuan Meifeng occupies the commanding heights with the first entrants and industry standard setters to guide the future development of the industry. With the successive introduction of national policies to control air pollution, especially the implementation of the fourth national standards for diesel vehicles, automotive urea is expected to achieve rapid growth. And the subsidiary Meifeng Technology acquisition of Miancheng Petrochemical natural gas pipeline and supporting facilities assets, coupled with the reduction in the price of natural gas for non-residential use, directly reduce the company's production costs, resulting in greater dynamic energy in 2016 performance.
Valuation and rating: the development of automotive urea is lower than expected, and the company's 16-year profit forecast is lowered by 50%. We forecast that the company's EPS in 2016, 2017 and 2018 is 0.23,0.31 and 0.37 yuan respectively, and the dynamic PE is 34 times, 25 times and 21 times respectively, maintaining the "buy" rating.
Risk hint: the risk of raw material price fluctuation, the risk that the production schedule of LNG project is lower than expected, and the risk that the market demand of automotive urea is lower than expected.
