Event: on July 14, the company issued a semi-annual performance forecast for 2015. the net profit belonging to shareholders of listed companies in the first half of the year was 4000-50 million yuan, equivalent to 0.068-0.085 yuan in EPS, turning losses into profits.
The growth in the first half of the year is in line with our expectations: the main reason for the sharp increase in the company's performance in the first half of 2015 is that the business of urea and compound fertilizer has risen in both volume and price. at the same time, the company has paid close attention to reducing costs and reducing costs, resulting in a further decline in production costs. In addition, the company's transformation and upgrading of clean energy and product structure adjustment strategy have also achieved initial results, and began to form new profit growth points.
Urea and compound fertilizer business picked up in an all-round way, and the company's profits improved significantly. Since the beginning of 2015, stimulated by the reduction of export tariffs in the peak season of urea and four tenders in India, the ex-factory price of urea has risen to about 1800 yuan / ton, an increase of 10% over the beginning of the year, and sales are good. As for compound fertilizer, due to its late start and weak market competitiveness, this year the company focused on speeding up the construction of sales outlets to achieve accurate segmentation of compound fertilizer products, and the sales situation improved significantly. In addition, Mianyang Industrial Park has been officially put into production, the new capacity put into production will thicken the company's performance, extend the urea industry chain, and improve the added value of products.
Automotive urea business is expected to break out this year. The company occupies the commanding height as an advanced entrant and industry standard setter, takes the wholly-owned subsidiary Meifeng Jialan as the platform, and adopts the sales model of "direct sales + distribution + chain retail + export". We will make every effort to promote the market layout and product promotion of automotive urea. In 2014, the company's sales of automotive urea increased by 61.23% compared with the same period last year. Meifeng Jialan has become a qualified supplier of Cummins and has signed contracts with three well-known domestic highway logistics enterprises. With the successive introduction of national policies to control air pollution, especially the implementation of the fourth national standards for diesel vehicles, the company's vehicle urea business is expected to break out this year.
Actively promote the LNG business, the Yazhong project is progressing smoothly: at present, the project is progressing smoothly, the construction is expected to be successfully completed this year, and the revenue will be contributed from 2016. The company has China Petroleum & Chemical Corp major shareholder background, determined to enter the energy industry, the layout of clean energy strategic thinking is clear. With the gradual promotion of China Petroleum & Chemical Corp's mixed ownership, it is more likely that its assets will be spun off into the platform of listed companies.
Performance forecast and valuation: we predict that the company's EPS in 2015, 2016 and 2017 will be 0.25,0.60 and 0.82 respectively. The dynamic PE is 34 times, 15 times and 11 times, respectively. The company is the core target of the air pollution control industry, the transformation of clean energy business attitude is determined, the current performance inflection point has emerged, we are optimistic about the future development of the company, maintain the "buy" rating.
Risk hint: the risk of a sharp rise in the price of natural gas for chemical fertilizer, the risk that the production schedule of the LNG project is lower than expected, and the risk that the market demand for automotive urea is lower than expected.
