Report guide
Xingfa Group released its 2023 annual report on April 1. The company achieved annual revenue of 28.105 billion yuan, a year-on-year decrease of 7.28%, and realized net profit of 1,379 billion yuan, a year-on-year decrease of 76.44%. Net profit after deducting non-return to mother was 1,313 billion yuan, a year-on-year decrease of 78.30%. Among them, in the 2023Q4 single quarter, the company achieved revenue of 6.178 billion yuan, a year-on-year increase of 13.27%, a year-on-year decrease of 25.73%, and realized net profit of 445 million yuan, a year-on-year decrease of 52.69%, an increase of 36.92% month-on-month, and net profit after deducting 434 million yuan, a year-on-year decrease of 58.90% and an increase of 31.52% month-on-month. The company's performance was in line with expectations.
Key points of investment
Production and sales differentiation of major products, overall sales growth
The annual output of specialty chemicals/glyphosate series/fertiliser/silicone series was 49.64/16.04/121.57,700 tons, respectively, 97.85%/-7.76%/22.96%/-11.45%, and sales reached 44.94/17.17/123.97/1873 tons, respectively, 85.17%/10.77%/22.55%/-15.55%; due to poor overall growth in the glyphosate and silicone industries in 2023 .
The cyclical sector boom declined, and the company's performance was under year-on-year pressure and improved month-on-month. The sharp year-on-year decline in the company's net profit was due to a sharp decline in product prices. The price profit of some products picked up in the 2023Q4 quarter, and the company's performance improved month-on-month. According to Baichuan Yingfu data, the average market prices for cyclical products such as glyphosate/ silicone/ yellow phosphorus/ monoammonium phosphate in 2023 were 32516.55/14933.73/24970.46/3052.2/3612.49 yuan/ton, respectively, 47.81%/-37.06%/-24.55%/-12.26%/-3.12%; 2024Q1 glyphosate/ silicone/ yellow phosphorus/ monoammonium phosphate diammonium phosphate were 25433.37/ 15501.96/23258.39/3095.96/3670.88 yuan/ton, year-on-year difference - 40.27%/-8.79%/- 20.23%/-7.69%/-3.08%, month-on-month, -8.72%/7.69%/-6.22%/-6.30%/-0.03%; gross profit was 1500.77/-426.68/54.96/338.1/484.72 yuan/ton, -88.73%/-15.38% /- 94.50%/7.93%/588.33%, -51.67%/-69.93%/-95.87%/-19.31%/111.35%, respectively.
The profitability of low-priced products declined sharply, and the company's year-on-year performance was affected, but there was an improvement month-on-month;? Abundant resources are abundant and the level of cost control is excellent. The production of new material products increases the company's profitability. As a leader in the domestic phosphorus chemical field, the central company continuously improves the comprehensive utilization of by-products and forms a phosphorus and silicon recycling industry chain. At the same time, the company has sufficient phosphate reserves. Currently, the company has sufficient phosphate reserves of about 405 million tons of its own mining rights. In addition, it also holds 70% of the shares in Jinghua Jinghua in Jingzhou and 50% of the shares in Qiaogou Mining. Through a 55% holding subsidiary, Yuanan Jixing holds 26% of shares in Yi'an Industrial, with a total equity reserve of 783 million tons, which can meet the company's production needs over a long period of time; in addition, the total installed capacity of the company's own hydropower plant is about 178,400 kilowatts, compared to 0.33 yuan/kilowatt-hour Electricity is 40% cheaper to buy. By continuously improving the upstream and downstream integrated industrial chain, the company has built the industry's unique “integrated mining and electrification”, “silica salt collaboration” and “mineral fertilizer integration” industrial chain. It has excellent cost control capabilities and great potential for future development.
Combining its own advantages, the company is actively developing high-value-added fine chemicals, and has now built 60,000 tons/year of electronic-grade phosphoric acid, 60,000 tons/year of electronic-grade hydrogen peroxide, 54,000 tons/year of functional wet electronic chemicals, 50,000 tons/year of photovoltaic adhesive, 5,000 m3/year aerogel felt, 200,000 tons/year of battery-grade lithium dihydrogen phosphate, etc.; currently 20,000 tons/year electronic-grade ammonia, 80,000 tons/year of electronic-grade ammonia, special silicone rubber 2,200 tons/year silicone microcapsules (of which 550 tons in the first phase Projects such as (completed in /year) are progressing steadily. We are optimistic about the company's layout in the field of fine chemicals. As the production capacity of the company's new materials sector increases, profits in the new materials sector will continue to grow.
Profit forecasting and valuation
Due to cyclical product price fluctuations, the company's profit forecast was lowered; the company's revenue for 2024-2026 is estimated to be 321.17/354.84/36.662 billion yuan, respectively; the corresponding EPS is 1.73/2.30/2.32 yuan, respectively; the corresponding PE is 11.41/8.56/8.50 times, respectively. The company is a leading company in the phosphorus chemical sector. It is expected to invest heavily in the construction of growth product projects in the future, and is optimistic about the company's growth and maintenance” “Buy” rating.
Risk warning
Risk of production capacity investment falling short of expectations; risk of large fluctuations in product prices; risk of new product development; risk of safety and environmental protection; risk of policy changes, etc.