Xingfa Chem(SH:600141) CSC SECURITIES (HK) LTD·2024-10-10 11:07Investment Rating - The report assigns a "Buy" rating to the company, indicating a positive outlook for its stock performance [4][5]. Core Insights - The company is expected to achieve a net profit of between 1.28 billion to 1.38 billion RMB for the first three quarters of 2024, representing a year-on-year increase of 37% to 48%, slightly exceeding expectations [4]. - The recovery in agricultural chemical profitability and the stable performance of the specialty chemicals segment are key drivers supporting the company's overall performance [4]. - The company has a robust long-term fundamental outlook as a leading player in the domestic phosphate chemical industry, with a reasonable current valuation [4][5]. Company Overview - The company operates in the chemical industry, with a current stock price of 22.09 RMB as of October 9, 2024, and a market capitalization of approximately 24.37 billion RMB [1]. - The major shareholder is Yichang Xingfa Group, holding 20.05% of the shares [1]. Product Portfolio - The company's product mix includes agricultural chemicals (38.2%), specialty chemicals (21.3%), trade logistics (17.4%), mining (10.6%), and others (12.5%) [2]. Financial Performance - The company forecasts net profits of 1.83 billion, 2.43 billion, and 2.89 billion RMB for 2024, 2025, and 2026 respectively, with year-on-year growth rates of 32%, 33%, and 19% [5][6]. - The earnings per share (EPS) are projected to be 1.65 RMB for 2024, 2.20 RMB for 2025, and 2.62 RMB for 2026, with corresponding price-to-earnings (P/E) ratios of 13, 10, and 8 [5][6]. Market Conditions - The phosphate rock market remains strong, with an average price of 1,017 RMB per ton in Q3 2024, reflecting a year-on-year increase of 14% [4]. - The company has announced price increases for glyphosate products by 5% to 15%, indicating a positive trend in the agricultural chemicals market [4]. Resource Development - The company holds approximately 780 million tons of phosphate rock reserves and has a designed production capacity of 5.85 million tons per year [5]. - The company is actively developing high-end fine chemicals to mitigate cyclical fluctuations in the market [5]. Future Outlook - The company is expected to benefit from the recovery in agricultural chemical prices and the stable performance of specialty chemicals, which will support its profitability moving forward [4][5].