1. The basic introduction of the company:
The company was founded in 2000, listed on the gem of the Hong Kong Stock Exchange in February 2004 and listed on the main board in August 2008. At present, the company mainly has two major business sectors: ecological agriculture, chemical fertilizer and metal magnesium industry. Among them, the fertilizer business has developed for more than 10 years, and the sales network and customer base are all over 20 provinces and regions. At present, the effective production capacity reaches 450000 tons. The main production base is located in Donghai County, Jiangsu Province. The company is the only one in the magnesium industry that has been listed as China's first "demonstration base for comprehensive utilization of mineral resources" by the Ministry of Finance and the Ministry of Land and Resources.
2. The company's business is in a period of rapid growth:
In the first nine months of 2013, the turnover of the company's agricultural fertilizer business was 762648000 yuan, an increase of 30.8% over the same period last year, while the gross profit margin of compound fertilizer and bio-organic fertilizer increased by 4.6% and 3.1%, respectively. The turnover of the metal magnesium business was 370136000 yuan, an increase of 44% over the same period last year, of which the turnover of the rare earth magnesium alloy business rose sharply by 105.3% to about 260 million yuan, the sales volume increased by 82.1% to 6236 tons, the average selling price increased by 12.7%, and the gross profit margin reached about 40%. In the whole business structure of metal magnesium products, the sales proportion of high gross margin rare earth magnesium alloys further increased.
3. The company's future business objectives:
The two major business sectors of the company are in a period of rapid expansion, among which the fertilizer production line with an additional annual capacity of 300000 tons in Jiangsu production base has entered the stage of construction and is expected to be completed and put into production in the first half of 2014. The target annual production capacity is expected to reach 1.15 million tons by 2016.
The capacity of magnesium metal products can be increased from 16000 tons to 25000 tons in 2014 through technological transformation, and the target annual production capacity can increase 3.9 times to 75000 tons in 2016. At present, rare earth magnesium alloy products and basic magnesium products each account for 50%, and by 2016, the proportion of basic magnesium products will be further reduced to 20%, while the proportion of rare earth magnesium alloy products with high gross margin will be increased to 80%. The trend of structural optimization is very obvious.
4. The financial situation of the company:
As of June 2013, the company held a total of HK $443 million in cash and bank deposits (HK $503 million in 2012). The net cash generated by operating activities during the period was about HK $44759000 and was in a very healthy financial position. In January 2014, the company issued 155 million new shares to the IFC at 0.75 yuan per share, with a net fund-raising of 114 million yuan, mainly used for half of the working capital.
5. The industry to which the company's metal magnesium products belong has great potential for future development:
According to the Chinese government's 12th five-year Plan for the Development of New Materials Industry, magnesium demand will grow at an average annual rate of 26.7% during the 12th five-year Plan period, much higher than the average annual growth rate of 7.4% for ten non-ferrous metals. Magnesium alloy products are known as "21 practical green lightweight structural materials" because of their light weight, high strength, shock and noise reduction, anti-electromagnetic radiation, rich resources, excellent performance and so on. The application of magnesium alloy lightweight materials is conducive to achieving the goal of energy saving and emission reduction. The field of automobile transportation will become the main consumer application industry of magnesium alloy. According to the goal of USAMP (American Association of Automotive Materials), the average amount of magnesium alloy used in each car produced in North America will be increased to 350 pounds by 2020 from the current average of 10-12 pounds.
6. Our suggestion: the company's metal magnesium business and agricultural fertilizer business are in the stage of substantial capacity expansion in the future, and these two major businesses have upstream resources, which can effectively control production costs. We believe that the company's overall revenue and earnings will also grow rapidly with capacity expansion in the future, and it is recommended to pay attention to it in the long term.
