Phosphate rock "one brother" six countries chemical rise mystery

The chemical sector is prone to demons. No one can think of the six-country chemical industry (600470), whose main business is chemical fertilizers.

On September 21st, the price of Six-Country Chemicals hit a recent high, with a closing price of 13.61 yuan and after the restoration of rights reached 28.95 yuan, only about one step away from the historic high of 31.29 yuan. On August 24th before 19 trading days, the stock price of Six-Country Chemicals was only 8.08 yuan, which rose by 68.44% during this period. Compared with gains in the broader market over the same period and gains in other stocks in the Phosph Chemicals segment, Six Nations Chemicals is far ahead.

In explaining this wave of rising prices, phosphorus chemical industry is fully optimistic about the market is an important reason. However, six-country chemical industry is far from the industry leader, but it is known as the "first brother" in the concept of phosphate rock. Behind the rise in its share price, what are the lesser-known stories? Is the market just really optimistic about its concept of phosphorus chemical industry?

Repeatedly unsuccessful

Turning over the historical charts of six-country chemical stock prices, there have been three waves of rise since July 2010. However, due to fundamental constraints, each rise ended with a fall, and the stock price center of gravity failed to move upwards.

On June 22, 2010, Six Kingdoms Chemical announced that the company and Sichuan University had signed the “Iron Phosphate, Phosphoric Acid” on June 18, 2010 for the technical development of key technologies for iron phosphate and lithium iron phosphate research and industrialization projects. "Lithium-iron technology research and production application development contract", the two sides jointly establish a battery-level phosphate production technology research and development center.

Sichuan University is responsible for researching and developing the production technology of iron phosphate and lithium iron phosphate products, solving the technical difficulties encountered by the company in implementing industrialization using this process, and realizing continuous, stable, and standard production of the process technology in the company's production facilities. Provide product technology solutions and production line design programs, forming an international advanced production and coating technology.

When the six countries announced that they entered the lithium iron phosphate market coincided with the market's preference for new energy vehicles concept, and then its stock price began a round of rise, from about 10 yuan in July 2010 rose to nearly 17 yuan in November 2010. However, with the retreat of the concept of new energy vehicles, the stock price of Six-Country Chemicals also began to decline.

On January 24, 2011, the price of Six-Country Chemicals fell to 11.55 yuan, after which a new round of gains started and rose to a maximum of 17.78 yuan on April 18. The January 28 announcement was critical to the rise of this wave. After preliminary calculations by the company’s financial department, it is expected that the 2010 net profit attributable to owners of the parent company will increase by 50%-70% compared with the same period of last year. Net profit The year-on-year increase was due to the increase in gross profit of the main products.

At the same time, Six Nations Chemicals announced that the company plans to jointly establish Tongling Guoxing Chemical Co., Ltd. with South Korea's Samsung Products Co., Ltd. and Samsung Products Hong Kong Co., Ltd., with a registered capital of 55 million yuan and a total investment of 110 million yuan. Six Kingdoms Chemical contributed 38.5 million yuan, accounting for 70% of the registered capital. The first-phase project of the joint venture company will build an annual production capacity of 200,000 tons* ammonium phosphate compound fertilizer project, and the total planned construction capacity will be 600,000 tons of compound fertilizer annually. The launch of new projects has opened up more imagination for future performance expectations.

However, the good times did not last long. A brokerage report ended the wave of rising prices shortly thereafter. According to a study released by CICC on March 28, the performance of Six-State Chemical's 2010 annual report was slightly lower than expected. Due to the homogeneity of the downstream products of phosphorus chemical industry and fierce competition, there is a lot of pressure on the company's performance.

On June 16th, Liuguo Chemical implemented the 2010 profit distribution and capitalization plan for capitalization: The company added 6 shares for every 10 shares, paid 1.5 yuan (including tax), and distributed a cash dividend of 1.35 yuan for every 10 shares after tax. After the implementation of the conversion plan, the share capital was expanded to 521.6 million shares. The company's share price was affected by this and went through a wave of gains and adjustments, and the stock price further fell after the company announced its 2011 semi-annual report on July 23.

Weak City Finalizer

This time the situation has changed dramatically. Although the overall trend of the market was weak, the price of Six-Country Chemicals rose even more urgently, and the momentum was stronger and more significant. Judging from the current stock price level at least, the market value of Six-Country Chemical has successfully turned a corner.

The trigger point for the rise in stock prices is the market's speculation on the price of phosphate rock and the integration of phosphate resources. On August 15, Huatai released a research report that the price of phosphate rock is increasing. Since the beginning of the year when Yunnan Phosphor Group raised the price, the domestic phosphate rock price continued to rise, and it has become the most profitable link in the phosphorus chemical industry chain. At present, the Yichang 30-grade plate price in Hubei is 460 yuan/ton, and the Guizhou 30-grade price is 495 yuan/ton. The domestic price of phosphate rock rose by more than RMB 120/ton over the same period of last year, or around 40%.

The report also looked at the long-term trend of phosphate rock. Due to the decline in the grade of phosphate ore, the increasing marginal cost of mining, and the stricter mining and management of phosphate ore in various provinces, the degree of scarcity of phosphate rock gradually increased and the degree of concentration increased. Will promote the long-term increase in the price of phosphate rock resources. In the future cycle fluctuations, the low price of phosphate rock will continue to shift upwards.

A few days later, the China Chemical Mining Association released the "12th Five-Year Development Plan for Chemical Industry Mining." "Planning" will raise the status of phosphate resources to an unprecedented level, require the establishment of phosphate mineral resources reserve mechanism in the next five years, improve the access threshold for phosphate mining. The market's kinetic energy for doing multi-phosphorus chemical industry has been further enhanced, and more investors have been able to replicate the trend of rare earths.

The brokers further fueled the issue and released an in-depth report recommending the phosphor chemical industry segment. Haitong Securities’ report on September 7 suggested that the phosphate rock was listed as one of the 20 minerals that could not meet the national production demand in the next 20 years, and it was even worse than potassium in the long run. The consolidation of phosphate rock resources in China helps to steadily increase the price of phosphate rock. The price of domestic phosphate ore has risen this year, but it is still about 80% lower than the price of international phosphate ore.

On September 19, the Ministry of Industry and Information Technology formally released the "addition conditions for ammonium phosphate industry", which again fueled the market's enthusiasm for speculating on phosphorus chemicals. The document proposes that within three years, no new or expanded WPA and its associated monoammonium phosphate and diammonium phosphate plants will be built or expanded in principle; in accordance with the enterprises that need to be relocated in the regional plan, wet-process phosphoric acid and supporting monoammonium phosphate and diammonium phosphate shall be newly constructed. In the installation, there must be phosphorus and *resource protection. At the same time, the project construction must be supported by the construction of a fluorine recovery unit and a comprehensive utilization project of phosphogypsum, and the phosphogypsum must be fully utilized.

Judging from the increase rate, Six Nations Chemicals is undoubtedly the “first brother” in the phosphate chemical industry. However, when recommending specific targets, Six-Country Chemicals is not the most respected stock by brokerage analysts. Some brokerage reports do not even include six. China National Chemicals Inc. is included in the recommended list. Is this an analyst's misjudgment or is there another reason?

Analysts believe that from the phosphate rock reserves, phosphate rock production capacity, phosphate fertilizer production, profitability expectations, price-earnings ratio and other indicators, the six countries in the chemical industry can not be considered the best target. But fundamentals are only a factor that affects stock prices. Funding is the king. There should be other more important factors behind the rise in Six-Country Chemicals.

Who is behind the scenes

On August 20th, a public announcement of Six Chemicals and the open information of the block trading platform may reveal some clues.

According to the announcement, the non-public offering of the restricted-sale conditions formed 160 million shares of tradable shares listed on August 24. On September 7, the company's stock price was sealed in the daily limit within an hour after the opening of the stock, and continued to eagerly increase after several trading days.

On the day of September 7, Guoyuan Securities Ma'anshan Yuxishan Road Securities Co., Ltd. sold two shares to China Merchants Securities Beijing Zhichun Dongli Securities Business Department and Guangfa Securities Beijing Jianwai Avenue Securities Business Department, each selling 5 million shares. 10.6 yuan, the total turnover of 106 million yuan.

A private equity person stated that after lifting the ban on tradable shareholders, the sale of tradable shares will also cooperate with other private placements in addition to their own sales. One of the more common methods is to sell a part of the package at a reasonable price. The latter gets the bargaining chip and then cooperates to operate the stock price. Finally, the retailer or the public offer is sold.

Public transaction information shows that Guoyuan Securities' Shanghai Hongqiao Road Securities Business Department sold a total of RMB 2133.7481 million while accumulatively buying 89,205,532,200 yuan on September 8. Haitong Securities Shanghai Pingwu Road securities business department sold 2730.3469 million yuan on September 8, and bought 2577.0476 million yuan on September 20.

Market participants believe that this self-purchasing behavior is a common form of operating stock prices, after the company's annual report high delivery also coincides with the agency's current speculation, after all, capital stocks are more easily pulled up after the shipment.

How long the stock price of Six-Country Chemicals can continue to be speculative is not certain. It can be confirmed that the agencies that participated in the initial issuance of additional shares have been profitable. According to the announcement on August 26, 2010, Six Nations Chemicals issued 100 million shares, and the institutions participating in the subscription included CNAC Xinang Guarantee Co., Ltd., Jiangsu Ruihua Investment Development Co., Ltd., Jiangsu Xinhui Venture Capital Co., Ltd., and Zhongrong International Trust. Co., Ltd., Anhui Investment Group Co., Ltd., Zhejiang Paradise Silicon Valley Yingfeng Equity Investment Partnership Co., Ltd., Tongling Industrial Investment Holdings Co., Ltd., China Shipping Management Co., Ltd., and China Steel Investment Co., Ltd. At that time, the issue price was 10.39 yuan per share, and now the share price has more than doubled since it was restored.

Looking back, at the time, the project that was used to raise funds was synthetic ammonia, a concept that the market currently does not like. If Phosphorus Chemicals is not as surprising as expected, will the Six-Country Chemicals once again fall back to the horizon after rising due to fundamental pressures?