Focusing on the two main businesses of refined natural alkali and nitrogen fertilizer, the leading position in the natural alkali business was consolidated. The company is committed to the production and sale of natural alkali soda, baking soda, and coal-based urea products. Currently, the production capacity of soda ash is 580+1 million tons, and the production capacity of baking soda and urea is 1.5 million tons/year respectively, ranking second in the country in terms of soda ash production capacity/number one baking soda production capacity, and the top 15 urea production capacity in the country. The company is rich in natural alkali resources and has outstanding cost and technical advantages. In the future, it will continue to promote the construction of the holding subsidiary Yingen Mining's Alashantamycin natural alkali project. The company will expand and strengthen its two main businesses, refined natural alkali and nitrogen fertilizer, and continue to follow the path of specialized, green and high-quality development to increase its market share.

Supply and demand for soda ash are gradually being balanced. The company's natural alkali business advantages are outstanding, and production capacity continues to expand. Recently, there has been a phased balance between supply and demand for soda ash: the downstream float glass boom has been boosted by public construction projects and real estate policies, and demand for soda ash has improved; photovoltaic glass, passenger car glass, and lithium carbonate consumption of soda ash continues to grow. In terms of photovoltaic demand, we estimate that in 2024-2028, the global 2.0+3.2 double glass equivalent to the apparent demand for soda ash will reach 19.7%/20.2%/20.4%/21.3%/21.7%, respectively. As the largest natural alkali circular economy demonstration base in China, the company has the largest proven natural alkali mine in China. The technology for preparing soda ash using the natural alkali method is advanced, which can effectively improve resource utilization efficiency, energy saving and consumption reduction, and reduce costs; at the same time, the company's soda ash production capacity continues to expand: the Alashan natural alkali project plans to build soda ash/baking soda production capacity of 780/800,000 tons/year. The first phase plans to build 4 million tons of soda ash and 400,000 tons of baking soda have reached production. soda 280/ Construction of 400,000 tons began in December 2023 and is expected to be put into operation by the end of 2025. The company's leading position in soda ash continues to be consolidated.

The urea supply pattern tends to be relaxed, and demand is increasing steadily. On the supply side, since 2020, urea prices have risen markedly due to the combined effects of the epidemic, energy, geographical situation, and food issues. Since then, China's urea production capacity has begun a new cycle of growth. On the demand side, we are optimistic that demand for urea agriculture will remain stable; demand for downstream urea related to real estate, such as melamine and urea resin, may grow at a limited rate; while demand for urea related to denitrification may benefit from environmental policies and maintain a high growth rate. The company has a urea production capacity of 1.54 million tons/year and 800,000 tons/year of ammonia synthesis. The gross margin level is higher than that of its peers, and the business is running steadily.

Profit forecasting and valuation: The company is a rare natural alkali standard, and has a strong cost/green competitive advantage. The production capacity of soda ash/baking soda will continue to expand in the future. We expect the company's net profit for 2024-2026 to be 2,486/28.21/3.208 billion yuan (+76.3%/+13.5%/+13.7%) and EPS 0.66/0.75/0.86 yuan, respectively, corresponding to current PE 10.7/9.4/8.3 yuan/share, respectively. Combined with relative valuation and absolute valuation methods, the company is expected to have a reasonable valuation of 8.65-9.90 yuan, which is a 22%-39% premium over the current stock price. The first coverage gave it an “superior to the market” rating.

Risk warning: Demand in the soda ash and downstream real estate/photovoltaic industry falls short of expectations, changes in industrial policies, fluctuations in raw material prices, falling short of expectations when the project is put into operation, subsidiary lawsuits, majority shareholder pledge risks, etc.