Events:
On December 12, the company received written resignation reports from eight senior executives, including the chairman and general manager, Zeng Zhongquan, most of whom resigned voluntarily due to job changes.
Event comments:
The resignation of senior executives is a normal adjustment, which has little impact on the day-to-day operation of the company. We believe that this change of a number of senior executives, including the chairman, has no significant impact on the company's daily operation and development policy. The company will continue to stride into the field of new chemical materials outside the main business of nitrogenous fertilizer.
Natural gas price reform has raised the company's costs, and the downturn in the urea market has led to a sharp decline in performance this year. In the first three quarters of this year, the company achieved revenue of 2.548 billion yuan, an increase of 6.64% over the same period last year. However, due to the continued downturn in urea prices this year and the increase in raw material costs caused by the natural gas price reform this year, the company's gross profit margin dropped sharply. In the first three quarters, the gross profit margin was 10.51%, down 3.21% from the same period last year. The net profit attributed to shareholders of listed companies was 9.9317 million yuan, a sharp drop of 84.32% compared with the same period last year. The company expects a net profit of 5 million yuan in 2013, down 95.88% from the same period last year. The 2014 fertilizer tariff adjustment plan announced that the tariff on urea during the peak season will be reduced to 15% plus 40 yuan per ton, which will be good for urea exports next year. At present, with the spring sowing market approaching, we expect urea prices to rise in stages in the near future, and the company's business situation will improve next year.
To enter the field of new chemical materials, the Chiyuan chemical project is expected to be put into production by the end of the year or early next year. While paying close attention to the main business of nitrogen fertilizer, the company strides forward to the field of new chemical materials. The wholly-owned subsidiary Chiyuan Chemical Co., Ltd. has an annual output of 60,000 tons of 1,4butanediol / 46000 tons of polytetrahydrofuran. At present, the main production equipment has entered the stage of installation and commissioning preparation, and is expected to be completed and put into production by the end of this year or early next year. In the future, the company will gradually transform from a single chemical fertilizer enterprise to a comprehensive chemical enterprise with both chemical fertilizer and chemical business.
Valuation and rating: the company's EPS in 2013 and 2014 is expected to be 0.01yuan and 0.02yuan respectively, and the corresponding dynamic PE is 481.11 times and 196.10 times respectively. Taking into account the company's low PB valuation and the company's future development in the chemical business, it is given an "overweight" rating.
Risk hint: the price of natural gas has risen sharply; the progress of the Chiyuan chemical project is not as expected.