The price of glyphosate picked up in the third quarter, and the company's performance has been repaired. On the evening of October 27, Xingfa Group released a report on the third quarter of 2023, saying that in the first three quarters of 2023, the company achieved operating income of 21.928 billion yuan, down 11.78 percent from the same period last year, and net profit of 934 million yuan, down 80.98 percent from the same period last year. Among them, the company realized operating income of 8.318 billion yuan in the third quarter, an increase of 10.07% over the same period last year and 18.18% compared with the same period last year; the net profit returned to its mother was 325 million yuan, down-74.21% from the same period last year, and an increase of 104.14% over the same period last year. The company's third-quarter performance improvement is mainly due to the rise in the price of glyphosate, the main product, and the profit level has been repaired. Q3's overall gross sales margin rebounded to 12.61%, year-on-year-19.84pcts, month-on-month + 1.53pcts.
The price of phosphate rock is rising, and the company's resource advantage is highlighted. Affected by the decline of exploitable phosphate rock grade and the increasing demand in new fields downstream, the domestic phosphate rock price has remained high in the past two years, and the resource scarcity attribute of phosphate rock has become increasingly prominent. From the perspective of production and marketing, the company produced 1.3056 million tons of phosphate ore in the third quarter, with sales of 634200 tons, with sales growing for three consecutive quarters, with an average sales price of 628.96 yuan / ton, up 8.8 percent from the previous quarter. At present, the company has phosphate rock reserves of about 429 million tons of mining rights, with a design capacity of 5.85 million tons / year. In addition, the company also holds a number of phosphate rock equity companies mainly for self-use, continue to produce phosphate fertilizer, glyphosate, wet electronic chemicals and other downstream high value-added products, in the context of domestic phosphate rock prices remain high, the company's cost advantages brought by its own mines continue to highlight.
A number of projects in the growth plate are progressing steadily and are optimistic about the long-term growth of the company. In the new materials and new energy plate, since the beginning of this year, the company has steadily promoted a series of high-growth projects, such as iron phosphate, lithium iron phosphate, lithium dihydrogen phosphate, photovoltaic glue, liquid glue, electronic-grade phosphoric acid, electronic-grade etching fluid, ultra-high purity electronic chemicals, and so on. Hubei Xingyou Phase I iron phosphate production line has been officially put into full production, and has been sent to downstream manufacturers for small batch product verification and testing. In addition, the company's new material products such as black phosphorus, aerogel and silicone microcapsules are being developed from 0 to 1 industrialization, which is expected to become a new rapid profit growth point for the company in the next 1-2 years. In the agrochemical sector, the recent Hubei Taisheng Chemical L-glyphosate crude drug and preparation project, and the environmental impact assessment announcement of the annual output of 50,000 tons of 2meme 4-drop project of Xingchen Technology Co., Ltd. have been announced one after another. the company is expected to gradually expand the product layout of the agrochemical plate by virtue of its accumulation in the field of glyphosate and continue to expand its influence in the agrochemical industry.
Risk tips: product prices fluctuate sharply, downstream demand is lower than expected, and the progress of projects under construction is not as expected.
Investment advice: downgrade earnings forecasts and maintain a "buy" rating.
Taking into account the downward price of the company's main products and other factors, we estimate that the company's net profit from 2023 to 2025 will be 1.285 billion yuan, a year-on-year growth rate of-78.9%, 63.2%, 8.2%, 1.11, 1.80, and 1.95 yuan, respectively, and the current share price will be 17.2, 10.5, 9.7x, maintaining the "buy" rating.