Main points of investment
Matters: the company disclosed semi-annual report, revenue of 2.75 billion yuan, net profit of listed company shareholders 54.73 million yuan, earnings per share of about 0.11 yuan.
Peace viewpoint:
With the increase in the price of phosphate fertilizer and the rectification and efficiency of subsidiaries, the performance in the second quarter improved significantly: the company's interim performance in 2015 was 54.73 million yuan, which was positive compared with-57.82 million yuan last year, and the net profit in the second quarter was 61 million yuan, which was also much better than the 6.38 million loss in the first quarter. The first reason is that the market prices of diammonium phosphate and monoammonium phosphate have risen compared with the same period last year, and the price of the company has gradually warmed up since the beginning of this year. On the other hand, the reason is that the company has strengthened the rectification and efficiency of many subsidiaries. Xintai Chemical and other subsidiaries have significantly reduced their losses through production suspension and rectification, and Jiangxi six countries and Hubei six countries are also reducing losses by tapping potential and reducing fees. Susong six countries will also plan to transfer in the second half of the year, and the efficiency of subsidiaries may be further improved.
The company has benefited from the warming of the phosphate fertilizer industry: China's phosphate fertilizer exports increased by 100% in the first half of the year compared with the same period last year, of which diammonium increased by 122% to 2.82 million tons and monoammonium increased by 133% to 1.39 million tons. India's phosphate fertilizer is in a period of continuous increase in imports, and its consumption is at its peak in the third quarter. Brazil's imports will improve significantly in the second half of the year compared with the first half of the year. The operating rate of major plants in the world remains high, and new production capacity is limited in the second half of the year. We maintain the view that the increase in the global supply of phosphate fertilizer is limited and that India is expected to lead to a significant increase in overseas demand, leading to a rise in phosphate fertilizer prices at the bottom. The company has 1 million tons of diammonium phosphate and 150000 tons of monoammonium phosphate. On August 10, the VAT policy expects that the related new costs can be partially transferred by the company, and the impact is limited.
Investment suggestion: the reform of the company's state-owned enterprises is being actively promoted, and it has been announced that Zhejiang International Trade Oriental has been introduced as a war investment at the group level, and the follow-up integration reform is worthy of attention. We are optimistic that the company will benefit from the improvement of the phosphate fertilizer industry and the reform of state-owned enterprises. It is estimated that in 2015-2017, the EPS will be 0.25pence 0.36 and 0.43 yuan respectively, and the price-to-earnings ratio of the previous share price will be 37.8,26.9 and 22.5 times respectively, giving a "recommended" rating for the first time.
Risk hint: phosphate fertilizer VAT related rules are uncertain; phosphate fertilizer price increase is lower than expected.
