The low-altitude economy has been hyped since the New Year, and there have been signs of cooling down in the short term, so where is the next theme after the low-altitude economy?
On April 12, the relevant departments issued the "Action Plan for the Comprehensive Utilization of Phosphogypsum", proposing that by 2026, the comprehensive utilization of phosphogypsum products will be more abundant, the utilization channels will be effectively broadened, and the comprehensive utilization level will be further improved, with a comprehensive utilization rate of 65%. The program provides guidance and impetus for the progress of the phosphorus chemical industry.
Isn't the spring of phosphorus chemical industry coming?
So, what is the current market situation of phosphorus chemicals?
The phosphate chemical industry is based on phosphate rock, with the upstream starting with the mining of phosphate rock, the midstream covering the production of phosphoric acid and yellow phosphorus, and the downstream focusing on the manufacture of various phosphorus-containing products.
The downstream market of phosphorus chemical industry can be divided into two categories, one is used in agriculture, such as phosphate fertilizer represented by monoammonium phosphate, diammonium phosphate and dicalcium phosphate, and the other is yellow phosphorus and phosphate widely used in industry, food and medicine.
Recently, with the arrival of the spring ploughing season of downstream phosphate fertilizer and the opening of the phosphate fertilizer export channel, the price of phosphate rock has been able to remain stable at a high level.
It is worth mentioning that since March 15, the export of phosphate fertilizer has been successively opened to the legal inspection and declaration process, and it is expected that the export volume of phosphate fertilizer in 2024 will be the same as that in 2023, of which diammonium phosphate is expected to export 5 million tons and monoammonium phosphate is expected to export 2 million tons. Due to the decline in exports in the first quarter, it is expected to make up for it in the second quarter, which will further support phosphate rock prices.
From the perspective of capacity supply, the effective production capacity of phosphate rock in mainland China in 2023 will be 108 million tons/year, the same as in 2022, and since there is no new phosphate rock production capacity in 2024, phosphate rock prices will remain high, and subsequent production capacity will be concentrated after 2025.
For the phosphorus chemical industry, phosphate rock is one of its core competitiveness, and the higher the self-sufficiency rate, the stronger the profitability.
Phosphate rock is an important non-renewable resource, and the continental phosphate rock resources are scarce and concentrated. In recent years, the problem of over-exploitation of phosphate rock has been focused on, in order to protect the strategic resource of phosphorus, the relevant departments have successively introduced a number of environmental protection and production restriction programs, so that whoever masters the phosphate rock, who has the initiative.
At present, among the domestic phosphate rock producers, Guizhou Phosphate, Yuntianhua and Xingfa Group are the top three.
Guizhou Phosphate Chemical Group has phosphate rock reserves of 1.5 billion tons, and high-grade phosphate rock accounts for more than 70% of the country's reserves; Yuntianhua now has phosphate rock reserves of nearly 800 million tons, Mangbu phosphate mining area has a preliminary estimate of 1.145 billion tons of phosphate rock resources; Xingfa Group now has 429 million tons of phosphate rock reserves with mining rights, with a total reserve of about 300 million tons.
With such good development prospects, what is the current market competition pattern?
1. Phosphate fertilizer industry
From the perspective of the market competition pattern of phosphate fertilizer, Yuntianhua and Guizhou Phosphate are the leaders of phosphate fertilizer, followed by Xinyangfeng, Hubei Yihua, Hubei Xiangyun, etc.
Among them, Yuntianhua has the largest fertilizer production capacity, with a total production capacity of 10 million tons/year, including 2.6 million tons of urea, 5.55 million tons of phosphate fertilizer, and 1.85 million tons of compound fertilizer. It can also be seen from the performance that whether it is revenue or net profit, Yuntianhua is the absolute leader.
Looking at the performance of Yuntianhua alone, the company's performance will decline in 2023 due to the decline in product prices, but under seasonal factors such as spring ploughing, the performance in the first quarter of 2024 will improve, achieving revenue of 13.857 billion and net profit attributable to the parent company of 1.459 billion, an increase of 78.46% from the previous quarter, which also attracted the social security fund to increase its position by 50%.
Overall, Yuntianhua's revenue is high, and the net profit attributable to the parent company is low, only in 2021, it will increase by 1238.77% year-on-year, and the increase in other years is smaller, which is mainly due to the high three fees (sales, management and financial expenses), but with the company's continuous optimization of the three fees, the company's total three fees in 2018 will be 6.678 billion yuan, and by 2023, the total three fees will drop to 2.492 billion yuan.
At the same time, Yuntianhua's debt ratio has also improved significantly, with the company's debt ratio of 89.13% in 2019 and 58.13% in 2023, close to the industry center level.
In addition, the state encourages listed companies to better return investors, and Yuntianhua, as a state-controlled listed company, has maintained stable profits and strong willingness to pay dividends in recent years, which is also reflected in the dividend yield, which has excellent performance compared with peers and is highly attractive.
Second, the yellow phosphorus industry
The main enterprises that focus on the yellow phosphorus industry in mainland China are Chengxing Co., Ltd. and Xingfa Group. Judging from the revenue of the two yellow phosphorus businesses in recent years, the overall growth trend is high, but the revenue of Xingfa Group is higher.
The gross profit margin of the two yellow phosphorus businesses both declined sharply in 2020, with the gross profit margin of ST Chengxing falling to 10.08% and the gross profit margin of Xingfa Group falling to 15.86%, and the profitability of the latter two rebounded, and the gross profit margin rose sharply.
Overall, Xingfa Group is better than ST Chengxing in terms of revenue, and the profitability of the two is comparable.
However, in the past two years, Xingfa Group's yellow phosphorus business has decreased, and the glufosinate business has increased, glyphosate is the world's most used herbicide variety, and the company currently has a production capacity of 230,000 tons/year of glyphosate, ranking first in China, with a revenue of 8.67 billion yuan in glyphosate series products in 2022, accounting for 28.60% of the company's total revenue.
Second, the iron phosphate industry
Due to the continuous growth of downstream demand for new energy vehicles and energy storage, the demand for iron phosphate materials has increased rapidly.
For phosphate miners, the development of iron phosphate has an inherent cost advantage, and a number of phosphate miners have entered the iron phosphate and even lithium iron phosphate industries, including Yuntianhua, Xingfa Group, Chuanheng Co., Ltd., Chuanfa Long Python, Xinyangfeng, Yuntu Holdings, etc.
However, at present, there is overcapacity of domestic lithium iron and lithium batteries, especially reflected in the raw materials of iron phosphate and lithium iron phosphate cathode materials, with an annual production capacity of nearly 3 million tons in 2023, but the market demand is about 1.5 million tons, and the capacity utilization rate is only about 50%.
Yuntianhua is also aware of the potential risks that the iron phosphate production capacity may bring to the company, so it actively controls the future construction projects to ensure the company's stable operation.
Finally, to sum up, with the arrival of the spring ploughing season of downstream phosphate fertilizer and the opening of the phosphate fertilizer export channel, the supply and demand of phosphate rock are tight, the price has increased, and the prosperity of the industry has improved significantly.
As a leading enterprise in the phosphorus chemical industry in China, Yuntianhua has an integrated industrial chain of "phosphate rock-phosphate fertilizer-phosphorus chemical industry", with significant advantages in resources and scale, and the company's performance is expected to further improve with the maintenance of phosphate rock at a high level.
The above analysis does not constitute specific trading advice, the stock market is risky, and investment should be cautious.
Pay attention to Little Elephant and get the most valuable "Growth 20: 20 Companies with the Most Growth Potential in 2024" investment report now!