Xinyangfeng (000902): New compound fertilizer with performance in line with expectations promotes profit growth
Investment Highlights Event: The company releases 2019 semi-annual report.
In the first half of 2019, the company achieved operating income of 57.
75 ppm, an increase of 4 per year.
25% (the growth rate of revenue is expected to be mainly determined by the way in which the business is recognized by the trade method and the net method is changed from the merger method, resulting in an increase in trade revenue and a decrease of 3).
310,000 yuan, after excluding this effect, the actual income increased by 11.
39%); gross profit is 12.
32 ppm, an increase of 13 in ten years.
3%; net profit attributable to mother 6.
3.1 billion, an increase of 17 in ten years.
1% (15% increase in performance forecast every year?
30%, in line with expectations.
The close to the lower limit of profit growth was mainly due to the increase in the proportion of bad debts of other receivables from 10% to 30%, resulting in an asset impairment reserve of approximately 38.45 million yuan, affecting net profit after tax of approximately 32.3 million yuan. After excluding this effectActual net profit attributable to mothers increased by 23.
05%); net operating cash flow 12.
8 billion, an annual increase of 322.
73%, an increase of 0 every year.
59 points; advance payment 10.
200 million, an increase of 5 every year.
The market share of domestic leading enterprises in the phosphate and fertilizer industry continues to increase.
The company has a capacity of 800 tons / year of various high-concentration phosphate and compound fertilizers and a capacity of 320 tons of low-grade ore washing. The company produces 280 tons of sulfuric acid / year, 15 tons of synthetic ammonia, 15 tons of potassium sulfate, and 15 additives of nitric acid / year.
In 18 years, the company’s compound fertilizer market share was 4 respectively.
12% vs. 7.
35%, ranking second in the industry for consecutive years.
Scale effects and industrial integration bring cost advantages and brand advantages.
The company’s industrial chain integration, the right to import potash fertilizer, and the unique location advantage bring about an excess cost advantage of about 180 yuan / ton.
The income of conventional compound fertilizers is relatively stable.
The sales volume of conventional compound fertilizer in 2019H1 increased by 5 year-on-year.
13%, income increased by 11 in ten years.
84%, the gross profit margin was reduced relative to 0.
Due to the dual impact of the high prices of upstream raw materials and the low prices of downstream agricultural products, the industry is fiercely competitive.
In order to cope with industry competition, the company has expanded its channel development efforts.
Benefiting from the company’s distributor channel resource advantage and strong market response speed, conventional compound fertilizers still achieved stable sales and profit growth in the fierce market competition.
New compound fertilizers have become profit growth points, and product structure has continued to be optimized and upgraded.
In the first half of 2019, the ratio of new compound fertilizer to operating income increased to 18.
82%, gross profit as a percentage of gross profit rose to 22.
Achieved sales growth of 23.
01%, income increased by 28 in ten years.
32%, gross profit margin increased by 0 天津夜网 in ten years.
55 points to 25.
63%, higher than conventional compound fertilizer 5.
The optimization of product structure benefits from the company’s continuous expansion of research and development investment in new fertilizers and the expansion of market capacity brought by high value-added marketing.
In 2018, the company and China Agricultural University established the Key Laboratory of Special Fertilizers for Crops of the Ministry of Agriculture and Rural Areas. Through continuous introduction of high-level scientific and technological talents, and strengthening of independent research and development, production, teaching, and research cooperation, stable fertilizers, special fertilizers, special fertilizers, water-soluble fertilizers,Eco-fertilizers and other products are new in one product.
The company’s technology promotion department intensified the construction of new-type fertilizer demonstration fields, implemented differentiated competition through technical services, and enhanced the recognition and stickiness of new-type fertilizer dealers and farmers.
The company’s highly known technical services are dedicated to enhancing the added value of products through professional technical services, creating brand value and enhancing user stickiness.
In February 19th, Liseno was established to promote the sale of high-end fertilizers and the “Companotek” with German Compo Expert, which began to be launched in the market in 19Q2 and will further contribute to sales in the second half of the year.
Monoammonium phosphate sales are stable, with each increase in gross profit margin of 0.
In 2019H1, due to the increase in self-consumption of compound fertilizer, the sales volume of phosphate fertilizer decreased by at least 3.
05%, income is reduced by 3 every year.
Due to cost reduction.
13%, the average value of the margin, each increase in gross profit margin 0.
In 2019H1, the main raw materials of phosphate fertilizer, sulfur, synthetic ammonia, and phosphate ore prices dropped.
Taking sulfur as an example, the price range in 2018 was RMB 1050-1550 / t, and the price in the first half of 2019 dropped sharply to RMB 800-1200 / t.
Due to the stable demand for downstream monoammonium phosphate compound fertilizer, the industry supply continues to shrink due to the impact of environmental protection policies, and the price is relatively firm, so the gross profit margin has increased.
Monoammonium phosphate is the focus of “triphosphorus” remediation, providing contraction in an attempt to drive price spreads wide, and high-quality capacity will continue to benefit.
Supply side: Monoammonium phosphate is the focus of the “three phosphorus” remediation, and the remediation intensity is great.
According to statistics, in 2018, the national monoammonium phosphate production capacity was 1,680 microns / year, which was replaced by 112 microns / year, and the capacity utilization rate reached 91.
4%, ten years +13.
8pct, capacity utilization has reached historical highs.
We expect that through the depth of environmental protection rectification, monoammonium phosphate production will be reduced by 15% in the next year, and the layout of continuous contraction is expected to continue.
Demand side: overall stability, but due to the impact of El Nino climate change, we expect the price of agricultural products to rise gradually, which is expected to drive demand for phosphate and compound fertilizers. As the industry leader, the company will take the lead to benefit.
Cost: Yellow phosphorus is not a raw material for monoammonium phosphate and has no effect on the production cost of monoammonium phosphate.
Phosphate ore is a monoammonium phosphate production material, but its price has risen to the highest level, and it has little effect on the production cost of monoammonium phosphate.
Inventory: It is at a historically low level since 2015, and it is only in 50 periods of social inventory. Profit: The overall profit trend is improving, the operating rate has steadily increased, and high-quality leading companies that usually attach importance to environmental protection promote sustainable benefits.
We expect that with the better demand for agricultural products in the future, the prices of monoammonium phosphate and diamine products will cause prices to stabilize and rebound.
Dealer channels have strong stickiness and significant marketing advantages.
The company has 5,000 first-tier dealers and 70,000 terminal retailers. At least some of the networks are the most densely distributed and have a high level of professional marketing channels. Over 50% of the dealers have cooperated for 10 years. Diversified varieties and multi-level channel modelsIt further strengthened the company’s channel stickiness; at the same time, because Xinyangfeng’s products have offset cost advantages and higher gross profit levels, they have the ability to give dealers more incentives and translate into more market share.
In the future, the company will still focus on boosting the sales of high-end fertilizers through the combination of pilot field demonstrations and technical services, and break through price-sensitive breakthroughs through the marketing model of “integrated large household services.”
Investment suggestion: The company is a leading company in phosphate compound fertilizer, with high cost, product, brand and channel.
During the adjustment phase of the industry, we will continue to realize technological research and development, product and marketing innovation, seize the resources of high-quality dealers and farmers, accelerate the increase of the city’s share, and further expand the moat.
Maintain “Buy” rating.
We expect the company’s EPS for 2019-2021 to be 0.
91 yuan / share, the corresponding PE is 15 respectively.
7x, maintain BUY rating.
Risk warning events: the macro economy exceeded expectations, and product prices fell sharply.