According to Futu News on March 20,$MIGAO GROUP (09879.HK)$Today's dark market opened higher, closing up 17.89% to HK$4.81, with a turnover of HK$2,505,700, with a total market value of HK$4.329 billion; 1,000 shares per lot earned HK$730 per lot without handling fees.
Market Source: Futu Securities Securities>
Investment highlights
Stable position in the industry: Migao Group is a domestic potash company in China, providing high-quality and diversified potash products. According to the 2022 potash sales calculation, Migao Group ranked third among Chinese potash companies and second among non-reserve potash companies. In 2022, the company's total potash sales accounted for about 7.1% of the total market share in China. In the potassium chloride, potassium sulfate and potassium nitrate segments, according to sales revenue, the company occupied the third, fourth and fifth positions in the same industry, respectively. Among them, potassium chloride sales accounted for about 7.0% of China's total sales revenue of potassium chloride in the same year, potassium sulfate accounted for 4.0%, and potassium nitrate accounted for 0.3%.
Stable customer relationships: Migao Group's main customers include large agricultural reclamation companies, state-owned tobacco companies, and integrated agricultural service companies. The company supplies potash products directly to major customers without relying on third party distributors. Given the scale of their operations, these customers usually order the company's potash products in large quantities. In fiscal year 2021, fiscal year 2022 and fiscal year 2023, revenue from the company's five major customers together accounted for about 50.7%, 54.2% and 46.7% of the company's total revenue, respectively. At the last practical date, the company had an average business relationship of more than 10 years with these five major customers.
Risk warning
Fluctuations in raw material prices: Potassium chloride is the company's main raw material. Its price fluctuates due to factors such as international economic trends, trade sanctions, global and regional supply and demand, uninterrupted supply chains, and global and regional consumption patterns. The company faces the risk of fluctuations in the purchase price and procurement costs of potassium chloride, which may have a significant adverse impact on the company's business, financial performance and prospects.
Changes in market demand: Most of the company's revenue comes from selling fertilizer products in China. Therefore, a decline in the relevant Chinese industry or the overall economic situation in the relevant market or the decline in the company's fertilizer products may affect the company's sales, which in turn puts pressure on prices, sales volume, and profits already obtained or can be obtained in the future.
Edit/Lily