Abstract

RMB 2.8 billion was raised from convertible bonds in this issue, which will be used to build 2, tons/year iron phosphate and supporting 1, tons/year wet-process phosphoric acid refining technical renovation project, build 8, tons/year functional silicone rubber project and repay bank loans after deducting the issuance expenses. The listing date is October 31st.

the integration leader of phosphorus chemical industry. At present, the company's main business is as follows: 1) Phosphate rock and phosphorus chemical industry account for 72% of its income, including yellow phosphorus 22%, phosphate fertilizer 11% and glyphosate 38%. In 22 years, the production capacity of phosphate rock was 4.15 million tons, with abundant reserves, ranking first in the country. Its main products are glyphosate and yellow phosphorus; 2) silicone, accounting for 16% of its income, has a monomer production capacity of 4, tons and a silicone rubber production capacity of 15, tons, ranking first in China; 3) Sulfur chemical industry, a derivative industrial chain based on phosphorus chemical industry engaged by Chongqing Xingfa, a shareholding company in Xinjiang Xingfa, in which the production capacity of dimethyl sulfoxide is 6, tons, ranking first in the world; 4) Wet electronic chemicals, mainly from sulfur chemicals and phosphorus chemical industry; In addition, the company also has trading business, but its proportion has gradually decreased in recent years, and it will give up strategically in the future. With its own hydropower facilities, various products have formed a mature circular economy industrial chain, which can basically achieve self-sufficiency in raw materials and has obvious cost advantages. In the past 2 years, driven by the rising prices of phosphate rock and various chemicals, the company's gross profit margin has greatly increased, and profits have increased several times. Under the background of abundant cash, the debt ratio has gradually decreased, and the overall business direction has been improving.

increase research and development. D investment, constantly expanding the production capacity of new products, and intentionally shifting from cycle to growth. At present, the company is one of the large-scale listed companies in China. From phosphate rock to phosphorus chemical industry chain, it has a strong periodicity. In the past two years, driven by the rise in commodity prices, its profits have increased substantially. Taking advantage of the integration of its industrial chain, the company is further expanding phosphorus-based materials, silicon-based materials and sulfur-based materials. In terms of phosphorus-based materials, the company focuses on expanding the production capacity of cathode material lithium ferrous phosphate and cutting into new energy sources. The planned production capacity of iron phosphate and lithium ferrous phosphate is 5, tons. In terms of silicon-based materials, the monomer production capacity under construction in silicone is 4, tons, and different types of silicone rubber are continuously expanded to broaden the downstream use. One of the current debt-to-equity swap projects will build 5, tons of photovoltaic rubber and 3, tons of liquid rubber; In terms of sulfur-based materials, Chongqing Xingfa, which holds 5% of the shares, has the production capacity of sulfur-based products such as dimethyl sulfoxide. In addition, the company also carries out research and development and capacity expansion of special chemicals and electronic chemicals. At present, the production capacity of electronic-grade etching solution, sulfuric acid and hydrogen peroxide under construction is 3, tons, 2, tons and 2, tons respectively. The above-mentioned production capacity under construction will release profits in the future and become a new profit growth point for the company. At the same time, it will further dilute the cycle characteristics of the company and step into growth. According to Wind's unanimous expectation, the company's estimated net profit for 22/23 is 6.51 billion/6.971 billion respectively, and the corresponding PE is 4.92X/4.58X respectively.

average price and good debt protection. The interest rate of convertible bonds is slightly lower than the average level, and the additional terms are quite satisfactory. Based on the closing price of the corresponding company on October 28, the parity of convertible bonds is 72.71 yuan, and the parity protection is general; Under the assumption of this paper, the pure debt value is 95.26 yuan, YTM is 2.41%, and the debt bottom is well protected.

the estimated listing price is between 115-12 yuan. The debt rating of Xingfa Convertible Bonds is AA, and the latest parity is 72.71 yuan. The convertible bond market can refer to the latest closing price of 129.78 yuan, with a premium rate of 22.57%. It is estimated that the insurance rate < P > On the whole, the interest rate of the company's convertible bonds is higher than the industry average, and the minor clauses in the additional clauses are more relaxed. As of October 28, 223, the latest closing price of the company was 28.75 yuan, and the corresponding parity was 72.71 yuan. The current convertible bonds are rated AA with a term of 6 years. On October 27th, the YTM of 6-year AA corporate bonds was 3.2611%. In this paper, YTM is taken as 3.26%, and the net value of convertible bonds is estimated to be 95.26 yuan, which has good debt bottom protection. Yield to maturity's 2.41% is lower than the yield of government bonds of the same term.

Analysis on the terms of convertible bonds

In terms of interest rate terms, the coupon rate of convertible bonds in six years is .2%, .5%, 1.%, 1.5%, 1.8% and 2.% respectively, which is slightly lower than the general coupon rate level of convertible bonds issued recently; The redemption price at maturity is 11 yuan, which is also lower than the market average.

8% of the shares, the actual controller Xingshan County State-owned Assets Supervision and Administration Bureau holds 1% of Yichang Xingfa. Although the actual controller is a state-owned enterprise, the shareholding ratio of the company is not high; Zhejiang Jinfanda, the second largest shareholder, is a large domestic supplier of glyphosate raw materials and preparations. According to the medium disclosure, Yichang Xingfa, the controlling shareholder, pledged 1.17% of the equity, accounting for 6.3% of its shareholding.

The company relies on the phosphate rock resources in Xingshan County, and mainly focuses on various phosphorus chemical products in the early days. After listing, it acquired Chongqing Jinguan to expand sulfur chemical industry in 27, providing raw materials for phosphoric acid production and producing other sulfur chemical products by-products at the same time. In 29, build silicone's production capacity and enter the silicon-based industry; In 14 years, it acquired the equity of Taisheng Chemical held by Jinfanda and realized the asset injection of glyphosate; Increase the production of wet chemicals in 2 years; In 21 years, it plans to cooperate with Huayou Cobalt in Ferrous lithium phosphate. The debt-to-equity swap project is mainly used for iron phosphate projects with an annual output of 2, tons. So far, the company has formed a unique industrial chain of "integration of mineral and electricity", "coordination of phosphorus and silicon salts" and "combination of mineral and fertilizer".

In the first half of p>223, the company's total revenue was 17.2 billion yuan, and its main business still focused on phosphorus chemical industry, accounting for over 7% of the revenue, of which yellow phosphorus and fine phosphorus products accounted for 22%, including yellow phosphorus, food-grade sodium tripolyphosphate, sodium hexametaphosphate, compound phosphate, acid and basic sodium pyrophosphate, sodium monofluorophosphate and other products. In the first half of this year, the prices of various products rose sharply, driving the company's revenue to rise substantially. The income from glyphosate and by-products accounts for 38%, most of which is glyphosate. In the first half of this year, the price of glyphosate rose sharply, which led to more than double the income. The revenue of phosphate fertilizer products accounts for 11%. In 21 years, the company's ammonium phosphate production capacity has increased from 6, tons to 1 million tons. In the first half of this year, the volume and price have risen together, and the income has increased substantially. Silicone's revenue accounted for 15.4%. In recent years, the company has actively expanded silicone's production capacity and revenue ratio has increased significantly; Trade business accounted for 6.5%. The company implemented the fine chemical industry strategy and strategically abandoned the trade business, and the proportion of this business income dropped significantly. Regionally, in the past, the company's export proportion increased significantly, and it increased to 42% in the first half of 223. On the one hand, the company's trade business contracted actively, on the other hand, the company's export income of glyphosate, fine phosphate and fertilizer products increased.

under the background of commodity price increase, the company's gross profit margin has greatly increased. More than 7% of the company's income comes from phosphorus series products, and phosphate rock itself is a resource-based product. In the past two years, on the one hand, it was quantitatively relaxed by the Federal Reserve during the epidemic, and the rapid economic recovery after the epidemic led to a great increase in demand for various products; On the other hand, under the requirements of dual control of domestic energy consumption, the supply of high-energy products is limited, which leads to a rapid increase in the prices of various chemicals, resource products and energy products. Under this influence, the price increase of the company's products and the gross profit margin are also greatly improved. In addition, the company's low-margin trading business gradually gave up strategically, and the proportion of low-margin business dropped sharply. Therefore, the company's comprehensive gross profit margin rose sharply from 13% in 219 to 38% in the first half of this year. The comprehensive gross profit margin of the company will be greatly affected by the fluctuation of product prices. If the demand declines or the supply is released quickly, it may impact the product price and further impact the company's profitability.

during the period, the expense rate continued to decrease. After the company began to include freight in the cost in 22, the sales expenses remained at around 1%; However, driven by the rapid growth of sales revenue, management expenses have been greatly diluted. Only in 2 years, due to the high impact of equity incentive expenses and accidental shutdown of subsidiaries, they have been continuously declining since 2 years. In terms of financial expenses, in the past 2 years, the company has actively controlled the debt scale and the debt ratio has been reduced from nearly 7% to 5%. In addition, in the past two years, the company has controlled its trading business and reduced its capital occupation, so the financial expense ratio has been reduced from about 5% to about 1%. Overall, the company's expense ratio continued to decline during the period.

R&D intensity has been significantly improved. In the past two years, the company's R&D expenditure rate has risen sharply, from 2% in 2 years to nearly 4%, especially in the context of the company's product price increase in the past two years, and the growth rate of R&D expenditure is even faster. The company regards R&D as the lifeline of the enterprise, takes the lead in setting up Hubei Three Gorges Laboratory, a high-energy major innovation platform, and brings together industry experts to tackle technical bottlenecks in five major industries, including comprehensive utilization of phosphogypsum, phosphorus-based chemicals, silicon-based chemicals, process control and intelligent equipment, and microelectronics chemicals. Established Xingfa Green Manufacturing Joint R&D Center with Institute of Process Engineering of Chinese Academy of Sciences, and established "Carbon Neutralization" Industrial Innovation Center with Shenzhen Institute of Advanced Studies of Chinese Academy of Sciences. In 221, it won 2 first prizes and 1 second prize of provincial and ministerial level scientific and technological progress, and the number of new patents granted far exceeded that of previous years, with a total of 65. With the company's continuous R&D investment, new products such as electronic chemicals and black phosphorus have emerged one after another, opening the ceiling of the company's growth.

operating cash flow has maintained a good level, but the scale of capital expenditure has been relatively large in recent years. The company belongs to a heavy asset industry, and depreciation accounts for a relatively high cost. In the past few years, commodity prices have obviously lied to you. Therefore, the company's operating cash flow has maintained a good level, and the historical net cash flow ratio has remained above 2%. Only in 221, due to the price increase of commodities and the rapid growth of profits, the net cash flow ratio has declined, but the overall operating cash flow scale is still high. However, in recent years, the company has more new investment projects and a large scale of investment expenditure, which may face certain financial pressure.

the supply of phosphate rock will still be limited, and the downstream agrochemical boom may face a decline, and new energy may bring a certain increase, and integrated enterprises will benefit more. On the supply side of phosphate rock, due to the "three phosphorus" rectification and environmental protection supervision since 216, the output of phosphate rock in China has been continuously decreasing since 216. In the past 21 years, the downstream agrochemical and new energy boom has driven demand to rebound, but the industry has expanded in an orderly manner and the effective production capacity has not increased, which has driven the price of phosphate rock to rise sharply. In the future, the country has characterized phosphate rock as a strategic resource, with limited capacity increase and long-term supply may continue to be limited. On the demand side, although the agrochemical industry recovered its prosperity and the demand increased after 21 years, the biggest driving factor of its price increase was the price increase of phosphate rock, in which the export of phosphate fertilizer was restricted, the price increase was limited and the profit was not significantly enhanced; However, due to the limited new production capacity of the supply side and the suspension of some production capacity of Monsanto in the United States, the price of glyphosate has further increased and its profit has also increased significantly. As far as new energy is concerned, with the development of new energy vehicles and energy storage, the installed capacity of power batteries will still increase, which will drive the demand for Ferrous lithium phosphate and lithium hexafluorophosphate to increase. However, the incremental demand for phosphorus ore brought by Ferrous lithium phosphate and lithium hexafluorophosphate in 21 years is only 1 tons, accounting for less than .5% of the global phosphorus ore output. Even considering the rapid growth since then, the marginal increment is limited in the short term. Moreover, from the supply point of view, Ferrous lithium phosphate currently has more capacity under construction, and it will fall into a trap in the medium and long term. From this point of view, enterprises with the ability of phosphorus chemical integration can keep the profits of all links in the industrial chain in their bodies, and their competitive advantages are relatively more obvious, but the price fluctuation of phosphorus ore will inevitably lead to periodic fluctuations in their profits.

increase investment in research and development, continuously put new products into production, and try to change from cycle to growth. At present, the company is one of the large-scale listed companies in China, and the industrial chain from phosphate rock to phosphorus chemical industry has a strong periodicity. In the past two years, driven by the price increase of bulk commodities, the profits have increased substantially. Taking advantage of its industrial chain integration, the company is further expanding phosphorus-based materials, silicon-based materials and sulfur-based materials. For phosphorus-based materials, the company focuses on expanding the production capacity of cathode materials in Ferrous lithium phosphate to cut into new energy sources. The planned production capacity of iron phosphate and Ferrous lithium phosphate is 5, tons; In terms of silicon-based materials, silicone's monomer production capacity under construction is 4, tons, and it is constantly expanding different types of silicone rubber and broadening its downstream use. One of the current convertible bond projects will build 5, tons of photovoltaic rubber and 3, tons of liquid rubber; In terms of sulfur-based materials, Chongqing Xingfa, which holds 5% of the shares, has the production capacity of sulfur-based products such as dimethyl sulfoxide. In addition, the company also carries out research and development and capacity expansion of special chemicals and electronic chemicals. At present, the production capacity of electronic-grade etching solution, sulfuric acid and hydrogen peroxide is 3, tons, 2, tons and 2, tons respectively. The above production capacity under construction will release profits in the future and become a new profit growth point of the company, while further diluting the characteristics of the company cycle and entering growth.

profits have increased greatly under the background of product price increase. Since the second half of 2 years, commodity prices have started to rise under the background of global loose money. In 21 years, under the influence of dual control of domestic energy consumption, commodities &; Energy prices have risen further, which has been affected by the conflict between Russia and Ukraine for 22 years. The price of resource products continues to fluctuate at a high level, and the price of phosphate rock is no exception. Since the second half of 2 years, the price has continued to rise, and it fluctuated at a high level in 22 years. Meanwhile, the downstream phosphate fertilizer, glyphosate, phosphate, etc. also rose due to the price increase of phosphate rock superimposed on the boom. As an integrated enterprise, the company benefited obviously, with a large increase in profits and profitability in 21 and 22 years. Subsequently, as the prices of phosphate rock and phosphorus chemical products enter cyclical fluctuations, the company's profits may also fall into cyclical fluctuations.

analysis of debt-to-equity swap projects

the company raised 2.8 billion yuan from debt-to-equity swap in this period, which will be used to build 2, tons/year iron phosphate and supporting 1, tons/year wet-process phosphoric acid refining technical transformation projects, build 8, tons/year functional silicone rubber projects and repay bank loans after deducting the issuance expenses.

1) Newly build 2, tons/year iron phosphate and supporting 1, tons/year wet-process phosphoric acid refining technical transformation project. This project is the first and second phase of the project of Hubei Xingyou New Energy Technology Co., Ltd. (the company holds 51% of the shares, and Huayou Cobalt holds 49% of the shares) with an annual output of 3, tons of battery-grade iron phosphate, and has obtained the environmental assessment. The construction period of the iron phosphate project is planned to be two years, with two phases of 1, tons each; The output of purified phosphoric acid will be increased from 1, tons/year to 15, tons/year after the technical renovation project of wet-process phosphoric acid refining, all of which will be used as intermediate products for the production of other chemical products, of which 1, tons will be used as the supporting consumption of 2, tons/year iron phosphate project.

2) build a new 8,-ton/year functional silicone rubber project. The project includes a new 5,-ton/year photovoltaic rubber project (supporting 2, tons/year 17 silicone rubber) and a new 3,-ton/year liquid silicone rubber project (supporting 2, tons/year vinyl silicone oil). The construction period of the project is 2 years and it will be constructed in two phases.

special note:

general statement: related questions and answers: what are the phosphorus chemical stocks? A list of leading stocks of phosphorus chemical industry

China is a country rich in phosphate rock resources, and a list of leading stocks of phosphorus chemical industry concept stocks: Chengxing (15 million tons of phosphate rock reserves), Xingfa Group (13 million tons of phosphate rock reserves), Hubei Yihua (3 million tons of phosphate rock reserves), Yuntianhua, Chitianhua and Liuguo Chemical

Liuguo Chemical (647): the concept of phosphorus price increase/.