I. Analysis and judgment
The total production capacity of fertilizer is 7.4 million tons, ranking first in China in terms of production and sales; the global layout is carried out both domestically and internationally.
The company's production and sales of compound fertilizer has been in the first place for many years. At present, the total production capacity of all kinds of fertilizer is 7.4 million tons, including 3.4 million tons / year of compound fertilizer, 2 million tons / year of controlled release fertilizer, 1.5 million tons / year of nitrofertilizer and 300,000 tons / year of water soluble fertilizer. The company has built 13 production bases in Shandong Linshu, Heze, Dezhou, Henan Dancheng, Zhumadian and other places, forming an industrial layout covering the main grain-producing areas in the country, closer to the raw material producing area and sales market, shortening the transportation distance and service radius, and further improving the competitiveness of enterprises. At the same time, the company has acquired Ekompany of the Netherlands, Compo of Germany, Navasa of Spain, and has branches in the United States and other places, the company is moving from "China leading" to "world leading".
"Jinfeng Commune" model to achieve win-win, cater to the trend of agricultural modernization, agricultural services have a bright future.
In 2017, Jinfeng Agricultural Service, China's first modern agricultural service platform, was launched and controlled by the company, with the participation of the World Bank (IFC), Huaxia Bank and ADB. Jinfeng Commune brings together the resources of the planting industry chain, through platform building and integration, so that these high-quality resources can provide Chinese farmers with a full range of agricultural services, such as soil remediation, whole-process crop nutrition solutions, crop quality improvement, sales and leasing of agricultural machinery and tools, agricultural technology training guidance, machine seeding generation harvest, agricultural product brand building, production and marketing docking, agricultural finance, and so on. While "reducing the cost of work reduction, improving quality and increasing efficiency", this model realizes the win-win situation of all aspects of the upstream, middle and downstream, and has a broad space for development. As of the 2018 semi-annual report, the company has set up nearly 100 county-level Jinfeng communes, which is expected to reach about 150 in the whole year, with 3 million mu of service land. It is estimated that 300 Jinfeng communes will be set up in 2019, serving 6 million mu of land. The company's goal in the next 5 years is to establish 1000 county-level Jinfeng communes, serving 300 million mu of land.
Under the background of zero increment of chemical fertilizer and degradation of cultivated land, "pro-soil No. 1" is worth looking forward to.
The current situation of cultivated land in China is grim: the area of saline-alkaline soil has accounted for more than 60% of cultivated land, and the soil quality has been seriously degraded by factors such as over-fertilization for a long time in our country. In this context, the relevant departments put forward the goal of zero increment of chemical fertilizer by 2020, and issued relevant policies to encourage the promotion of soil improvement. In 2018, the company launched a series of pro-soil planting products represented by "pro-soil No. 1". This product is a new type of fertilizer developed based on American Fulang bioenergy technology and combined with the actual situation of domestic soil. It can significantly improve soil, improve crop quality and increase yield. It is expected that pro-Earth No. 1 will become an important growth point for the company's performance.
Second, investment suggestions: it is estimated that the company's EPS from 2018 to 2020 will be 0.21,0.23,0.26 yuan respectively, corresponding to PE 35X, 31x and 28X. At present, the average valuation level of Shenwan chemical compound fertilizer industry in 2018 is 18 times, considering the announcement that Jinfeng Commune and pro-soil No.1 have a good prospect and will be covered for the first time and given a "recommended" investment rating.
Third, risk hint: the price of compound fertilizer fluctuates more than expected, and the promotion of the company's products / services is not as expected.
