Xinyangfeng (000902): an underrated leader in agricultural consumer goods!
Xinyangfeng’s finances: stable profitable growth, abundant cash flow, healthy assets and liabilities.
1) Growth: After removing the influence of adverse policy factors such as the government’s increasing levy on the compound fertilizer industry in 2016, the company has maintained a revenue growth of about 10% and a profit growth of about 20% for the past six years.
From the perspective of sales volume, since 2012, the company’s sales volume has continued to increase until the downturn in the industry since 2016, with an average growth rate of three years still reaching 8.
2) Profitability: The company’s average ROE has been as high as 16% since 2014; the company’s net interest rate has averaged 8 in the three years and one quarter since 2016.
46%, higher than Kim Jong Tai (4.
38%), Stanley (4.
77%) and Yuntu Holdings (1.
3) Cash flow and liabilities: The net cash flow generated by the company’s operating activities is always positive, and the total net cash flow from operating activities during the five-year period from 2014 to 2018 is as high as 31.
4.7 billion, with an annual average of 6.
300 million; due to long-term high profit and high net operating cash inflow, the company’s debt ratio has been repeated, and the asset-liability ratio in the first quarter of 2019 was only 23.
Core competitiveness: Why does the company have such excellent financial performance?
Outstanding cost advantage + channel marketing effort!
1) Cost advantage is outstanding.
The company has a cost advantage of about 200 yuan / ton because of: 1) a long industrial chain and upstream monoammonium phosphate production capacity; 2) it has the right to import potash fertilizer and can import potash fertilizer at a low price; 3) the location is reasonable and it hasConvenient transportation such as waterways and railway lines, reducing logistics costs; 4) Having advanced and perfect production technology and supporting facilities, further reducing the company’s costs.
2) Marketing channels are working hard to help sales volume and market share continue to increase.
Relying on cost advantages, the company can give more incentives to dealers and more cost-effective products to end consumers, so that it can continue to increase sales during a downturn in the market environment. In recent years, the company has continuously obtained high-quality channelsResources. In 2018, the number of the company’s first-level dealers reached 4,800, an increase of 300 a year, which constitutes an important factor for the company’s sales growth and continuous increase in market share, and has contributed to the excellent sales flexibility when the industry’s prosperity returned.
3) Product upgrades, the company’s product structure continues to be optimized.
The company has made great efforts in research and development, products, brands, channels, and services to vigorously develop new compound fertilizers.
The company’s new compound fertilizer sales increased rapidly, and the proportion of high-profit new fertilizer continued to increase, which will help the company’s overall gross profit and net profit rate continue to rise.
The industry competition pattern has improved, and the “triphosphate control” and the recovery of agricultural product prices have helped the company’s performance growth!
1) In 2019, the Ministry of Ecology and Environment issued the “Implementation Plan for the Investigation and Rectification of the” Three Phosphorus “on the Yangtze River,” which strengthened the “Three Phosphorus” special investigation and rectification action involving phosphate mines, phosphate fertilizers, and phosphorus-containing pesticide manufacturing, including phosphate chemical enterprises and phosphogypsum depotIt is expected that the supply of monoammonium phosphate will shrink significantly, the advantages of core resources will be further highlighted, and the company’s operating moat will be consolidated, and the company’s cost advantage will be more prominent!
2) The domestic agricultural product price is expected to recover at the bottom, and the rise of corn is obvious, which will help the bottom of the compound fertilizer industry to recover.
“Buy” rating: It is expected that the company’s revenue will be 110-2019.
2.7 billion, an increase of 9.
98% / 9.
21% / 12.
27%, net profit attributable to mother is 9.
27 ppm, the corresponding EPS is 0.
09 yuan, an increase of 20 per year.
93% / 20.
11% / 20.
01%. Considering the stable growth of the company’s performance and the moat of the performance, we give the company 20 times PE, and the target price for the 2019 performance is 15.
Risk reminders: 1. Fluctuations in prices of agricultural products and raw materials; 2. Limitations of cost estimation; 3. Intensified competition.