YYTH(SH:600096) Bank of China Securities·2025-05-06 12:22Investment Rating - The report assigns a "Buy" rating to the company, with a market price of RMB 22.28 and a sector rating of outperforming the market [1]. Core Views - The company is a leading player in the domestic phosphate fertilizer industry, possessing significant upstream resources in phosphate rock and coal, which provides a clear integrated advantage. Continuous reforms have optimized operating expenses, and long-term profitability is expected to remain at a high level, with dividends anticipated to be sustained at elevated levels. This is the first coverage of the company, leading to the "Buy" rating [3][5]. Summary by Sections Financial Performance - The company is projected to achieve net profits of RMB 5.55 billion, RMB 5.76 billion, and RMB 5.83 billion for the years 2025 to 2027, with corresponding EPS of RMB 3.02, RMB 3.14, and RMB 3.18, leading to PE ratios of 7.4x, 7.1x, and 7.0x respectively [5]. - For 2024, the company expects a revenue decline of 10.89% to RMB 61.54 billion, while net profit is projected to increase by 17.93% to RMB 5.33 billion. The dividend payout ratio is expected to be 47.86% in 2024 [7][8]. Business Overview - The company has a phosphate rock production capacity of 14.5 million tons per year and coal mining capacity of 4 million tons per year, with a total fertilizer production capacity of 10 million tons per year. The company holds a leading market share in phosphate rock reserves and production [8][30]. - The company’s revenue is primarily derived from its fertilizer and logistics businesses, with fertilizer contributing significantly to gross profit. In 2024, fertilizer and logistics revenues are expected to be RMB 26.99 billion and RMB 25.58 billion, respectively [32][36]. Market Position and Industry Outlook - The company is positioned as a domestic leader in phosphate fertilizers, with a market share of approximately 19.16% in P2O5 production. The phosphate fertilizer market is expected to maintain stable growth, supported by robust demand from the agricultural sector and increasing consumption in new energy applications [8][12][54]. - The report highlights that the domestic phosphate rock market is experiencing a slight decrease in effective production capacity, while demand is expected to grow due to the development of new energy sectors [54][55]. Dividend Policy - The company has a strong commitment to shareholder returns, with a planned cash dividend payout ratio of no less than 45% of the distributable net profit for the years 2024 to 2026. The cash dividends for 2022, 2023, and 2024 were RMB 1.83 billion, RMB 1.82 billion, and RMB 2.55 billion, respectively [49].