Net profit returned to mother in '23 billion yuan/-76% YoY, maintaining the “gain” rating
Xingfa Group released its annual report for the year 23 on April 1. It achieved annual revenue of 28.1 billion yuan, yoy -7%, net profit to mother of 1.38 billion yuan (minus 1.31 billion yuan), yoy -76% (minus non-yoy -78%); of these, 23Q4 net profit to mother was 450 million yuan (minus 430 million yuan), yoy -53% /qoq +37% (minus yoy -59% /qoq +32%). The company plans to pay a cash dividend of 0.6 yuan per share (tax included). We expect the company to have a net profit of 18/22/2.6 billion yuan in 24-26 years, corresponding to EPS of 1.64/2.01/2.36 yuan. Combined with a comparable 24-year Wind average of 9xPE, considering the growth potential of new projects and new materials to enhance competitiveness, we will give 13xPE in 24 years, with a target price of 21.32 yuan to maintain the “gain” rating.
The boom in most main products was under pressure, and annual profits declined year-on-year
Annual fertiliser/glyphosate sales volume yoy +23%/+11% to 124/170,000 tons, revenue yoy +4.6%/-51% to 36/4.3 billion yuan, gross margin yoy-10.4pct/-27.1pct to 8.7%/31.0%. Along with the easing of supply pressure in the phosphate fertilizer and glyphosate product industry, the decline in product sentiment dragged down the sector's profit; both demand and price sentiment declined, with sales volume of YOY -16% to 187,000 million tons in 23 years, and revenue yoy -48% to 21,000 million yuan, gross margin yoy- 13.2pct to 4.3%; specialty chemicals revenue yoy -19% to 5 billion yuan, sales yoy +13% to 449,000 tons, gross margin yoy-17.5pct to 20.8%; phosphate ore maintained a relative boom, mining revenue yoy +87% to 1.6 billion yuan, gross margin yoy-0.2pct to 73.7%. Annual comprehensive gross margin yoy-19.4pct to 16.2%.
The silicone boom has picked up, and glyphosate is awaiting downstream recovery
According to Baichuan Yingfu, the prices of phosphate ore/yellow phosphorus/monoammonium/diammonium/glyphosate on April 1 were 0.1/2.2/0.3/0.37/25,000 yuan/ton, respectively, from +1%/0%/-10%/-1% at the beginning of the year. The phosphate fertilizer boom declined somewhat due to factors such as off-season, while phosphate ore prices remained relatively high for nearly ten years. In terms of glyphosate, the industry chain is expected to recover and gradually improve. In terms of silicone, the price of DMC/107 glue was +6%/+7% at the beginning of the year to 1.5/153,000 yuan/ton on April 1. Along with the recovery in downstream demand, combined with factors such as supply optimization at low prices, the product boom improved.
The product line continues to expand, and new projects help future growth
According to the annual report, in terms of new technology, in 23, the company pioneered a new process for producing dimethyl disulfide in liquid phase sodium methanethiol; introduced several new BOE etchant products to downstream semiconductor companies; opened a test route for synthesizing and amplifying ammonium glyphosate; and built a 100 kg black phosphorus amplification device. In terms of new projects, Xingfu Electronics' 30,000 tons/year electronic-grade phosphoric acid and 20,000 tons/year electronic-grade etching solution, Hubei Ruijia 50,000 tons/year photovoltaic glue, Hubei Xingyou 300,000 tons/year battery-grade iron phosphate (phase I), Hubei Xingrui 550 tons/year microcapsule/5000 m3/year aerogel felt, Hubei Jixing 800 tons/year phosphating agent, etc. have been put into operation; Houping's 2 million tons/year phosphate ore beneficiation and pipeline transportation project, Hubei Xingrui 30,000 tons/year liquid glue (phase 1) project is being accelerated.
Risk warning: downstream demand falls short of expectations; progress of new projects falls short of expectations.