Everbright Securities: Give Yuntu Holdings a buy rating

2021-11-01Zhao Naidi of Everbright Securities Co., Ltd. conducted a study on Yuntu Holdings and released a research report "2021 Third Quarter Report Review: Product Volume and Price Increase, Q3 Net Profit Hit a Record High", this report gives a buy rating to Yuntu Holdings, the current stock price is 16.48 yuan.

Yuntu Holdings (002539)

essentials

Event: On the evening of October 29, the company released its third quarter report for 2021. In the first three quarters of 2021, the company achieved revenue of 10.092 billion yuan, a year-on-year increase of +48.33%, and a net profit attributable to the mother of 781 million yuan, a year-on-year increase of +110.68%. Among them, the company achieved revenue of 4.008 billion yuan in 2021Q3, +71.66% year-on-year, +27.87% month-on-month, and net profit attributable to the mother of 377 million yuan, +110.84% year-on-year, +69.15% month-on-month.

The volume and price of the main products increased together, and the net profit in the single quarter of 2021Q3 hit a record high. Benefiting from the sales growth of the company's compound fertilizer products and the price increase of lian alkali and phosphorus chemical products, the gross profit margin of the business increased year-on-year, and the company's performance in the first three quarters of 2021 doubled. In 2021Q3, the company's single-quarter net profit attributable to the mother hit a record high, +110.57% year-on-year and +68.9% quarter-on-quarter. According to iFinD data, the 2021Q3 domestic compound fertilizer wholesale price index was +24.7% year-on-year, +15.4% month-on-month; the price of monoammonium phosphate was +79.4% year-on-year, +30.3% month-on-month; the price of soda ash was +55.7% year-on-year, +26.6% month-on-month; the price of ammonium chloride was +66.8% year-on-year and +40.0% month-on-month. While product prices continue to rise, superimposed on the company's own integrated phosphorus chemical industry chain, the company can effectively control production costs, and promote the company's product gross profit margin to increase synchronously.

The production capacity of traditional fertilizer and phosphorus chemical products is abundant, and the company can benefit sustainably under the high prosperity. The company's existing compound fertilizer production capacity of 5.1 million tons / year, while the company in Hubei Songzi and Xinjiang Changji new compound fertilizer projects during the reporting period, after the completion of the new fertilizer capacity of 850,000 tons / year. In addition, the 100,000 tons of water-soluble fertilizer project in Changji, Xinjiang is expected to be put into operation before the end of 2021, and the 800,000 tons of full spray pulp new slow-release compound fertilizer project in Hubei base has also been launched, and the gradual completion of the new project will lay a solid foundation for the future increment of compound fertilizer. In addition, the company also has a yellow phosphorus production capacity of 60,000 tons / year, is the mainstream supplier of yellow phosphorus in China, and also has a production capacity of 430,000 tons / year of monoammonium phosphate. Driven by the current supply-side reform caused by environmental protection, power rationing and other reasons, we believe that the price of phosphorus chemical products will remain high in the future, maintaining a higher price level, and the company can significantly benefit.

The expansion of 350,000 tons of iron phosphate project and supporting projects, the traditional phosphorus chemical industry shines with new brilliance. On September 3, the company announced that it intends to invest 500 million yuan to invest in the construction of 350,000 tons of battery-grade iron phosphate and supporting projects. The project will be built in two phases, the first phase of 100,000 tons / year iron phosphate will be completed and put into operation in March 2023, and the second phase of 250,000 tons of iron phosphate and supporting wet phosphoric acid, refined phosphoric acid, phosphate mineral processing, sulfur acid, slow-release compound fertilizer, phosphorus gypsum, waste heat power generation and other projects will be completed and put into operation in December 2023. In addition, the construction of supporting projects not only ensures the adequate supply of raw materials for the upstream of iron phosphate, but also fully considers the comprehensive utilization of by-products and energy, and strives to maximize the benefits of the project.

Profit forecast, valuation and rating: The price of the company's main products continues to rise, and the follow-up is still expected to maintain a high prosperity, and the company still has a number of production capacity construction in the field of compound fertilizer and iron phosphate, so we raised the company's profit forecast. It is expected that the company's net profit attributable to the parent company in 2021-2023 will be 10.46 (up 35.7%)/12.05 (up 32.0%)/13.75 (up 32.7%) yuan, respectively, maintaining the company's "buy" rating.

Risk warning: product price fluctuation risk, production capacity release is less than expected, safety production and environmental protection risks

A total of 8 institutions have given ratings and 8 buy ratings in the last 90 days; the average target price of institutions in the past 90 days has been 18.27; the Securities Star Valuation Analysis Tool shows that Yuntu Holdings (002539) has a good company rating of 3 stars, a good price rating of 2.5 stars, and a valuation comprehensive rating of 3 stars.