Liuguo Chemical(SH:600470) Guo Ji Jin Rong Bao·2025-05-29 13:56Core Viewpoint - Liu Guo Chemical plans to raise up to 800 million yuan through a private placement to invest in a 280,000 tons/year battery-grade refined phosphoric acid project, with a total investment of 1.194 billion yuan and a payback period of 6.55 years [1][9]. Company Overview - Liu Guo Chemical primarily engages in the production and sales of phosphate fertilizers and fine chemical products, being one of the largest integrated manufacturers in East China [5]. - The company has production capacities of 450,000 tons/year for monoammonium phosphate, 640,000 tons/year for diammonium phosphate, 300,000 tons/year for urea, and 1,550,000 tons/year for compound fertilizers [5]. Industry Context - Since 2014, China's phosphate fertilizer usage has declined from 8.4534 million tons to 5.3630 million tons in 2023, reaching a recent low due to government policies promoting modern agriculture and controlling traditional fertilizer usage [5]. - Phosphate and compound fertilizers are the main revenue sources for the company, generating sales revenues of 2.680 billion yuan and 2.183 billion yuan respectively, accounting for 42.88% and 34.93% of total revenue as of December 31, 2024 [5]. Financial Performance - The company's operating revenue has continuously declined from 7.549 billion yuan in 2022 to 6.251 billion yuan in 2024 [6]. - The net profit attributable to the parent company has also decreased significantly from 237 million yuan in 2021 to 2.3 million yuan in 2023, with a slight recovery to 2.5 million yuan in 2024 [6]. - The gross profit margin fell from 14.85% in 2021 to 8.05% in 2023, with a minor recovery to 9.36% in 2024 [6]. Strategic Shift - In response to ongoing pressures in the traditional fertilizer business, the company is transitioning towards high-value sectors, specifically producing and selling battery-grade refined phosphoric acid [8]. - The planned fundraising will significantly enhance the company's refined phosphoric acid production capacity, aligning with the growing demand from the rapidly developing electric vehicle and energy storage industries [9]. Market Dynamics - The refined phosphoric acid is a core raw material for lithium iron phosphate batteries, which are experiencing high growth in demand [9]. - However, the industry faces challenges with an oversupply of lithium iron phosphate battery capacity, leading to project terminations by other companies in the sector [10].