Performance review
2019 performance is in line with our expectations
Sirte announced 2019 results: revenue was 3.016 billion yuan, down 3.55% from the same period last year; net profit from home was 238 million yuan, down 20.7% from the same period last year, corresponding to 0.33 yuan per share, which was in line with our expectations; non-net profit was deducted from 141 million yuan in 2019, down 49.6% from the same period last year. The decline in revenue and profit of the company is mainly due to the decline in sales and profits of chemical fertilizer products compared with the same period last year. The company plans to pay a dividend of 0.8 yuan for every 10 shares.
In 2019, the company sold 1.37 million tons of chemical fertilizer, down 7.5% from the same period last year; revenue of monoammonium phosphate decreased 21.7% to 958 million yuan, and gross profit margin decreased 5.78ppt to 19.63%; revenue of ternary compound fertilizer increased 0.7% to 1.677 billion yuan, and gross profit margin decreased 1.11ppt to 21%. In 2019, the company's overseas operating income was 188 million yuan, down 50% from the same period last year, mainly due to the decline in fertilizer prices and sales due to fierce competition in overseas markets.
Trend of development
The price of monoammonium phosphate and compound fertilizer rebounded during the peak demand season. In 2019, the production capacity of monoammonium phosphate in Hubei accounted for more than 40%. Affected by the epidemic, the operating rate of 1Q20 phosphate enterprises in Hubei was low, the market supply of monoammonium phosphate was tight, and the price of monoammonium phosphate was supported by the peak season of superimposed spring ploughing demand. The price of monoammonium phosphate in the company has rebounded somewhat. At present, the ex-factory price of monoammonium phosphate is 1950 yuan / ton, which has risen 5.4% since the Spring Festival. Due to the rise in the price of elemental fertilizer upstream and the peak season of spring ploughing and fertilizer preparation, the company's ex-factory price of sulfur-based compound fertilizer is 2240 yuan / ton, up 2.3% since the Spring Festival.
The integrated industrial chain has been improved, and fund-raising projects have contributed to the growth. In 2019, the company's pyrite 380000 tons / year technical renovation project has entered the stage of formal production. We expect that after the project is put into production, the company's pyrite production will be reduced, and the industrial chain will be further improved to enhance profitability. The company raised investment for the construction of 650000 tons of new fertilizer and 400000 tons of soil conditioner project. At present, the plant construction has been completed, and equipment procurement and installation are being carried out. We expect that the commissioning of the project will contribute to the company's performance growth.
Profit forecast and valuation
Taking into account the decline in the prices of products such as monoammonium phosphate compared with the same period last year, we lowered our 2020 profit forecast by 15% to 0.35 yuan per share, and introduced a 2021 profit forecast of 0.48 yuan per share. The company's stock price now corresponds to a 21-year price-to-earnings ratio of 14pm 10.2x for 2020amp. We maintain our target price of 6 yuan, corresponding to a 23.5% upside and a price-to-earnings ratio of 17.2% to 12.6x in 2020, and maintain an industry rating that outperforms.
Risk
The prices of monoammonium phosphate and compound fertilizer fell, and the sales of chemical fertilizer were lower than expected.
