HBYH(SZ:000422) Southwest Securities·2025-09-02 11:07Investment Rating - The report assigns a "Buy" rating for Hubei Yihua with a target price of 17.51 CNY over the next six months, compared to the current price of 14.28 CNY [1]. Core Views - Hubei Yihua is a diversified large-scale phosphate chemical enterprise with a strong presence in fertilizers, chlor-alkali chemicals, fine chemicals, and coal sectors. The company has a complete industrial chain layout and rich resource reserves, having evolved from a local small factory to a major enterprise since its establishment in 1977 [7][13]. - The integration of quality assets has broadened growth paths, particularly through the acquisition of Xinjiang Yihua, which significantly enhances the company's production capacity in urea and chlor-alkali products, thereby strengthening its competitive advantages [18][36]. - The fertilizer segment remains a major revenue contributor, with coal business margins remaining high, indicating a solid profit source for the future [22][36]. Summary by Sections Financial Performance - In the first half of 2025, Hubei Yihua reported revenues of 120.05 billion CNY, a year-on-year decrease of 8.98%, and a net profit attributable to shareholders of 3.99 billion CNY, down 43.92% year-on-year [19][22]. - The company expects a compound annual growth rate (CAGR) of 28.15% for net profit over the next three years, with projected revenues of 169.64 billion CNY in 2024, increasing to 238.86 billion CNY in 2025 [2][36]. Product Capacity and Margins - The company has significant production capacities, including 2.16 million tons/year of urea and 1.65 million tons/year of ammonium phosphate. The coal business contributes to high margins, with coal gross margins at 43.90% [16][22]. - The gross margins for various products in the first half of 2025 were as follows: ammonium phosphate at 18.42%, urea at 12.90%, PVC at -8.65%, and coal at 43.90% [22]. Valuation and Estimates - The report anticipates a price-to-earnings (PE) ratio of 17 for 2025, with a target price of 17.51 CNY based on this valuation [36]. - The report also provides a comparative analysis with other companies in the phosphate chemical industry, indicating an average PE of 12 for 2024 and 13 for 2025 [34].