Main points of investment
2021H1 realized a net profit of 646 million yuan, an increase of 258.36% over the same period last year, exceeding market expectations:
The company achieved a net profit of 646 million yuan in mid-2021, an increase of 258.36% over 180 million yuan in the same period last year. The year-on-year growth rate was higher than that of Yingxi Guide about 50ppts, and the performance exceeded market expectations. The performance growth is mainly due to the improvement of sales and gross profit margin of products such as urea, compound fertilizer, methanol, dimethyl ether and melamine. Specifically, 1) Urea: 2021H1 income 2.074 billion yuan, yoy+32%, gross profit margin yoy+8.6ppts to 35.4%, mainly due to urea product sales and average selling price increased by about 8% and 23% respectively 2) compound fertilizer: 2021H1 revenue increased by 13% to 1.981 billion yuan, gross profit margin decreased by 2ppts to 15%, mainly due to the increase in sales volume and average selling price of compound fertilizer by about 5% and 8% respectively. 3) Chemical products: 2021H1 methanol revenue increased 355% year-on-year to 733 million yuan, dimethyl ether revenue increased 79% year-on-year to 618 million yuan, melamine sales revenue increased 69% to 535 million yuan, furfuryl alcohol revenue increased 48% to 335 million yuan.
In the context of carbon neutralization, the shortage of supply and demand in the industry continues, and high product prices are supported:
Since the beginning of 2021, the prices of urea, compound fertilizer, melamine and methanol have increased by 52%, 15%, 99% and 13% respectively, with a net increase of 900,330,6600 and 290 yuan per ton. Under the background of carbon neutralization, the supply side of the coal chemical industry tends to tighten. Take urea products, one of the main sources of profits of the company, as an example. At present, the urea industry has about 1400w tons of backward fixed bed production capacity, accounting for about 20% of the total production capacity of the industry, and it is expected that clearance will be accelerated within 2-3 years. At present, the total inventory of domestic urea enterprises is about 100000 tons, which is at an all-time low, which is about 1 / 2 level in the same period last year. The tight situation of supply and demand in the industry is expected to continue, and high prices are supported.
Maintain the "buy" rating with a target price of HK $6.15:
The company's new base in Jiujiang was put into production in February this year, and the technical renovation capacity of the Xinxiang base is expected to be released in November. We raised the company's profit forecast and expected to record operating income of 138.57 yuan and 15.785 billion yuan respectively from 2021 to 2022, an increase of 32.67% and 13.91% respectively over the same period last year, and the net profit of 11.99 yuan and 1.407 billion yuan, an increase of 244.68% and 17.28% respectively. With reference to the range of 5-7 times the company's historical median PE, we give the company 6 times the target PE in 2021, corresponding to the target price of HK $6.15, with room for an increase of 32.57% over the current price, maintaining a "buy" rating.