Performance is in line with expectations

The company's 2015 income is 3.93 billion yuan, the net profit attributable to YoY-17.6%, is 55.44 million yuan, the net profit after deducting non-profit from YoY+122.7%, is 42.63 million yuan, and the income per share of YoY+117%, is 0.0937 yuan, which is basically in line with our previous expectations. Of this total, the income in the second half of the year was 2.036 billion yuan, an increase of 7.7% over the previous month, and the net profit attributable to it was 9.75 million yuan.

The main product urea sold 576100 tons, down 17% from the same period last year, the income was 956 million yuan, and the gross profit margin was 22% higher than the same period last year. The sales of compound fertilizer was 392500 tons, an increase of 96.54% over last year, and the income was 844 million yuan, up 78.7% from the same period last year, with a gross profit margin of 10.7%, an increase of 2.7ppt over the same period last year.

Trend of development

The pattern of overcapacity in the urea industry remains unchanged, and the proportion of compound fertilizer increases. According to Zhuochuang statistics, China's urea production capacity increased to about 89 million tons in 2015, an increase of 1.13 percent over last year and an all-time high. Among them, the production capacity in Northwest China and North China increased more, and the production capacity in Northwest China alone increased by 2.55 million tons. The commissioning of the industrial park project in 2015 increased the company's compound fertilizer production and sales by more than 96%, accounting for about 40.5% of chemical fertilizer sales.

The transformation and development of the LNG clean energy project is expected to be completed in 2016. Langzhong LNG project is a key project for the company's transformation and upgrading, while actively promoting the launch of the Bazhong project and planning channel construction to accelerate the company's transformation to clean energy.

Profit forecast

Keep the company's 16-year profit forecast of 0.13 yuan unchanged, and give the 2017 profit forecast of 0.15 yuan, a growth rate of 37% and 16% respectively.

Valuation and suggestion

The company's neutral rating remains unchanged, and the current share price corresponds to the 2016 and 2017 61x/52x respectively. Due to the downward movement of the market valuation center, the target price was lowered to 9.3 yuan, a range of 42%, corresponding to 17-year Pram E 62x.

Risk

Urea overcapacity exceeded expectations.