Report guide
Xingfa Group released its 2024 quarterly report on April 26. 2024Q1 achieved revenue of 6.888 billion yuan in a single quarter, up 4.82% year on year, up 11% month on month, and realized net profit of 382 million yuan, down 15.07% year on year, down 14% month on month, after deducting net profit of 358 million yuan without return to mother, down 13.05% year on year and 18% month on month. The company's performance was in line with expectations.
Key points of investment
The decline in profit from major product prices affected the company's profits. In some industries, the industry sentiment improved in the second quarter. The output of glyphosate series/silicone series/specialty chemical fertilizer 2024Q1 was 6.15/5.63/13.4/345,000 tons, respectively, 114%/60%/130%/30% year on year, and sales reached 5.82/5.16/11.77/287,000 tons, respectively, compared with 96%/19%/86%/24% year on year respectively. The year-on-year decline in the company's net profit was due to a decrease in product price sentiment. According to Baichuan Yingfu data, the average market prices of 2024Q1 glyphosate/ silicone/ yellow phosphorus/ monoammonium phosphate were 25413.22/15593.33/23153.01/3086.67/3670.38 yuan/ton, respectively, -40.32%/-20.92%/-7.97%/-3.09%, month-on-month, -8.79%/-6.57%/-9.30%/-0.04%; 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%, month-on-month, -51.67%/-69.93%/-95.87%/-19.31%/111.35%, respectively. Entering 2024Q2 at the end of April, the average market prices for glyphosate/ silicone/ yellow phosphorus/ monoammonium phosphate were 25299/16533.33/22549.16/3046.57/3669.90 yuan/ton, respectively, -17.18%/-9.85%/-3.20%/-15.20%/-2.35%, respectively, 1.67%/-15.35%/-5.27%/-0.33%, respectively; gross profit was 1423.48/1287.5, respectively /678.86/165.33/505.76 yuan/ton, year-on-year were -73.39%/-47.80%/138.45%/-32.49%/33.80%, respectively, and 8.58%/-438.25%/8148.60%/-43.99%/7.76% month-on-month, respectively.
A leader in the domestic phosphorus chemical industry. The entire industry chain layout highlights the collaborative advantage. As a leader in the domestic phosphorus chemical field, the 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 about 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.
Steadily promote the construction of a new material sector and create a new profit growth point. Combining its own advantages, the company is actively developing high-value-added fine chemicals. It has now built 60,000 tons/year of electronic-grade phosphoric acid, 60,000 tons/year of electronic-grade sulfuric acid, 10,000 tons/year of electronic-grade hydrogen peroxide, 54,000 tons/year of functional wet electronic chemicals, 50,000 tons/year photovoltaic glue, 5,000 m3/year aerogel felt, 200,000 tons/year of battery-grade lithium dihydrogen phosphate, etc.; currently 20,000 tons/year of electronic-grade ammonia and water production capacity of 10,000 tons/year Ammonia grade, 80,000 tons/year special silicone rubber, Projects such as 2,200 tons/year silicone microcapsules (the first phase of which 550 tons/year has already been completed) 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, and the net profit due to the company is 19.07/25.28/2,564 billion yuan respectively; the corresponding EPS is 1.73/2.29/2.32 yuan, respectively, and the corresponding PE is 12.45/9.39/9.26 times, respectively. The company is a leading company in the phosphorus chemical sector. It is expected to invest heavily in growing 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.