Xingfa Group (600141) 2019 Third Quarterly Report Review-Third Quarter Performance Increases MoM, Profitability Continues to Improve
Benefiting from the rise in prices of some products and the decline in prices of raw materials, the company’s third-quarter performance increased by 128% month-on-month, and its profitability continued to improve.
Considering that the severe environmental protection regulation is expected to drive the improvement of the phosphorous industry’s business climate, and the expansion of production capacity brings about the expected growth in performance, we are firmly optimistic about the company’s long-term development.
The company’s EPS for 2019-2021 is predicted to be 0.
77 yuan, maintaining target price of 12.
6 yuan and “Buy” rating.
The third-quarter performance increased greatly from the previous quarter, and profitability continued to improve.
The company achieved operating income of 144 in the first three quarters of 2019.
47 trillion, +1 a year.
01%; net profit attributable to mother 3.
10,000 yuan, at least -23.
Realized operating income in the third quarter
4 billion, -4.
15%, realizing net profit attributable to mother 1.
7.7 billion, +128.
Benefiting from the decline in the prices of raw materials and the rise in prices of some products, the company’s profitability in the third quarter improved significantly from the previous quarter, and the gross profit margin for single quarter sales.
49%, +3 from the previous quarter.
32pct; net sales margin 3.
The price of yellow phosphorus remained high, and the profitability of phosphorus chemical industry improved.
Affected by the environmental protection of the yellow phosphorus industry in the southwest, the price of yellow phosphorus has changed in stages and is currently at an historical high.
The average sales price of the company’s yellow phosphorus in the third quarter was 1.
650,000 yuan / ton, about +16 in the first half of the year.
The prices of overlapping raw materials dropped, and the profitability of the phosphorus chemical sectors such as yellow phosphorus, phosphate, and glyphosate increased significantly compared with the first half.
In the future, driven by the severe environmental protection supervision and the strategic protection of phosphate rock 杭州夜网论坛 resources, we are optimistic that the prosperity of the phosphorus industry will continue to increase.
The company’s advantageous mineral-electricity-chemical integration advantages and the industry’s leading layout are expected to fully enjoy the prosperity and product prices.
The price of organic silicon recovered, and the acquisition of 50% equity of Xingrui Silicon Materials increased its performance.
Affected by the peak demand season and the reduction in supply of some equipment maintenance in the industry, the price of organic silicon rebounded in stages.
The average selling price of silicone and 107 glue in the third quarter was 1.
640,000 yuan / ton, about +2 in the first half of the year.
In August this year, the company completed the acquisition of a 50% stake in Xingrui Silicon Materials, a holding subsidiary, to convert it into a wholly-owned company. This acquisition will help the company consolidate the layout of the integrated organic silicon industry chain and gradually increase the company’s performance.
The orderly expansion of phosphate ore and ammonium phosphate capacity has driven long-term performance growth.
In March of this year, the company obtained a mining license for Houping phosphate ore, which has a total phosphate rock production capacity of 760 millimeters. The reserves of phosphate rock and the scale of production capacity are among the highest in the industry.
The company is constructing new product capacity of ammonium phosphate and organic silicon monomer. Among them, the ammonium phosphate production capacity of 40 is expected to be put into production by the beginning of 2020. After completion, it will produce a total capacity of 100 tons; the organic silicon monomer under construction capacity of 16 is expected to be in 2020.Completion in June will increase production capacity to 36 inches.
The launch of new production capacity is expected to provide a driver for long-term performance growth.
Implement the stock incentive plan and improve the long-term incentive mechanism.
The company implemented a large-scale stock incentive plan on September 16, granting a total of 15.99 million shares to 354 incentive objects through targeted issuance, accounting for 1 of the total share capital.
7% grant price 5.
79 yuan / share.
The plan covers the company’s directors, senior executives, middle management personnel and core backbone employees. It will further improve the long-term incentive mechanism and be linked to the interests of shareholders, optimistic about the company’s long-term stable development.
Risk factors: Product prices have fallen sharply; global agricultural demand has fallen; new planned capacity releases have fallen short of expectations.
Investment suggestion: The environmental protection regulation is expected to be severely expected to drive the improvement of the phosphorus industry’s prosperity, and the expansion of production capacity expansion will bring about performance growth expectations. We are optimistic about the company’s long-term development.
Taking into account the company’s completion of the acquisition of 50% equity in Xingrui Silicon Materials, which will increase its performance, the company’s 2019-2021 return to its parent’s net profit forecast is increased to 4.
06 trillion (previous forecast was 3.
1.3 billion), the corresponding EPS is 0.
Maintain target price of 12.
6 yuan (corresponding to 27 times PE in 2019) and “Buy” rating.