incident. On January 3, eight departments including the Ministry of Industry and Information Technology and the National Development and Reform Commission jointly issued the “Implementation Plan for Promoting Efficient and High-Value Utilization of Phosphorus Resources” (hereinafter referred to as the “Implementation Plan”), which proposes to optimize the industrial structure to accelerate the clearance of backward production capacity and encourage leading phosphorous chemical enterprises to grow bigger and stronger.
The phosphorus chemical products market stabilized, and phosphate ore maintained a high boom. Since Q4 '23, demand for winter storage of phosphate fertilizer has started one after another, the phosphorous chemical industry has maintained its prosperity, and phosphate ore prices are still fluctuating at a high level. According to Baichuan Yingfu data, as of December 31, 2023, the price of phosphate ore was 1007 yuan/ton, +5.4% from the end of September; the price of yellow phosphorus was 2,2464 yuan/ton, -9.7% from the end of September; the price of glyphosate was 258.05 million tons, -11.9% from the end of September; the price of monoammonium phosphate was 3330 yuan/ton, +8.8% from the end of September, and the price of diammonium phosphate was 3,682 yuan/ton, +1.2% from the end of September. According to the 2023 mid-year report, the company has a production capacity of 5.85 million tons of phosphate ore and is expected to benefit from the integration of the phosphorus chemical industry chain.
Multiple projects are progressing in an orderly manner, moving towards new materials, new energy materials. As of the 2023 mid-year report, the company has production capacity of 5.85 million tons/year of fine phosphate, 230,000 tons of raw glyphosate, 75,000 tons of formulations, 360,000 tons of silicone monomer, and formed a downstream production capacity of 150,000 tons of silicone rubber, 56,000 tons of silicone oil, and 2,500 tons of acid crosslinking agents, 200,000 tons of diammonium phosphate, 800,000 tons of refined and purified phosphoric acid, 180,000 tons of wet electronic chemicals, etc.
A number of key projects under construction of the company are progressing steadily: 20,000 tons/year electronic-grade ammonia co-production project (Hubei) and 40,000 tons/year ultra-high purity electronic chemicals (Shanghai); under construction of 80,000 tons of special silicone rubber, 2,200 tons of silicone microcapsules, 5,000 cubic meters of aerogels, etc.; participating companies Hubei Youxing's 300,000 tons/year lithium iron phosphate phase I project and the 100,000 tons/year battery-grade lithium dihydrogen phosphate project are expected to be completed and put into operation one after another. In the future, as the company's key projects are implemented one after another, the share of revenue from the new materials and new energy business is expected to increase, further enhancing the company's ability to withstand the risk of cyclical fluctuations.
The advantages of phosphorus resources are remarkable, laying the foundation for the company's long-term development. The company is rich in phosphate resources. As of the 2023 mid-year report, the company holds mining rights with phosphate ore reserves of about 412 million tons, a phosphate ore design production capacity of 5.85 million tons/year, holds 70% of Jingzhou Jinghua (proven phosphate reserves of 289 million tons, currently in the prospecting stage), and holds 50% of the shares in Qiaogou Mining (proven phosphate reserves of 188 million tons, currently in the exploration and mining stage). Through its holding subsidiary Yuanan Jixing, it holds a mining license. (In the construction phase of the mining project) 26% equity. Abundant phosphate resources provide favorable conditions for the company to develop the phosphorus chemical industry.
Investment advice: The company is a leading phosphorous chemical enterprise. It has outstanding advantages in phosphate ore resources, new material projects continue to advance, and is optimistic about the company's long-term development. Based on changes in product prices, we adjusted the company's profit forecast for 23 and 24, and added a profit forecast for 25 years. We expect the company's net profit to be 12.19, 16.50, and 2,253 billion yuan respectively. The closing price on January 3 corresponds to PE 17, 13, and 9 times PE, respectively, to maintain the “recommended” rating.
Risk warning: production capacity investment falls short of expectations; risk of product price fluctuations; risk of raw material price fluctuations;