On October 30, 2024, the company disclosed its three-quarter report. In the first three quarters, it achieved revenue of 2.483 billion yuan, a year-on-year decrease of 14.13%; realized net profit of 0.518 billion yuan, a year-on-year decrease of 47.89%; in the third quarter, the company achieved operating income of 0.785 billion yuan, a year-on-year decrease of 9.71%, and net profit to mother of 0.248 billion yuan, a year-on-year decrease of 10.71%

The existing production line maintains a high production load, and production efficiency has been further improved. The company achieved potash production of about 0.4786 million tons in the third quarter. The company achieved high-efficiency production with only one million tons of production capacity, an increase of 0.063 million tons over the previous month, and production efficiency was further improved. In the third quarter, the company achieved sales of 0.3804 million tons, down 0.18 million tons from the previous quarter. Sales volume was adjusted according to sales strategies and delivery times, and some products were not included in the third quarter as inventory. Domestic potash prices increased to a certain extent in the third quarter, and overseas prices fluctuated slightly. Overall, the company's average sales price of potash fertilizer increased markedly in the third quarter.

The company was in a stable production state at a high load in the third quarter. The increase in efficiency led to a decline in some amortization expenses. The cost of potash fertilizer improved to a certain extent, compounded by an increase in the average sales price of products, and the increase in single-ton potash fertilizer profits in the third quarter. The gross margin of the company's product sales in the third quarter was 49.26%, up nearly 3 points from the second quarter. While sales volume declined, overall profit recovery in the single quarter was achieved.

Potash fertilizer is operating within the price range, and the commissioning of the new production line is expected to drive the company to achieve further growth.

The second 1 million ton production capacity is further advanced, and the third 1 million ton is expected to be put into operation in the first half of next year, leading to a significant increase in production next year. The company's current second production capacity of 1 million tons of 2 #和3 #斜井正在积极进行贯通工作，预计年底有望实现贯通，而第三个1 million tons is expected to be put into operation in the first half of next year. The abundant production capacity of the three production lines combined with later production capacity is expected to drive a significant increase in the company's overall output. At the same time, large-scale production is also expected to further drive cost optimization, thus achieving a significant increase in performance.

Profit Forecasts, Valuations, and Ratings

Since the company's second 1 million ton has yet to be released, the company's profit forecast for 2024 was lowered by 66%. The company's 2024-2026 operating income is 3.762, 6.252, and 7.922 billion yuan, respectively, net profit to mother is 0.78, 1.175, and 1.461 billion yuan, EPS is 0.84, 1.27, and 1.57 yuan/share, respectively. The current PE valuation of the company's stock is 21, 14, and 11 times, maintaining the “buy” rating.

Risk warning

Projects under construction fell short of expectations, prices of potash products fell sharply, and there is a risk of overseas political changes.