Fertilizer circulation welcomes the golden age

The recent circulation of agricultural capital has become the focus of the market. Fertilizer prices have become a catalyst for plate prices due to the approach of spring planting.

It is generally expected by market participants that the organization of agricultural production and socialized services in “No. 1 Document” will become an important direction for the development of modern agriculture, and the related agricultural distribution industry will be continuously supported by the policies.

Fertilizer circulation ushered in the golden age Last week, the urea leading company in Shandong raised the price gradually, and the price adjustment ranged from 50-100 yuan for different manufacturers. The urea price also increased in different regions of the international market, which is expected to boost the performance of the fertilizer sector.

According to statistics, the overall scale of China's agricultural capital market in 2011 was about 860 billion yuan, of which the fertilizer market was 430 billion yuan, accounting for 50% of the agricultural capital market.

At present, fertilizer production and distribution companies are highly fragmented, and there is room for improvement in the degree of concentration and significant improvement in earnings. According to a research report, China has registered more than 5,000 chemical fertilizer production enterprises of various types, and tens of thousands of agricultural material circulation enterprises at all levels, while the concentration of compound fertilizer (class circulation industry) and fertilizer circulation industry is the lowest, and the top 10 in compound fertilizer in 2010. The market share of the manufacturers is 31.5%, and the market share of the top ten manufacturers in the fertilizer circulation industry is less than 25%.

In addition, the acceleration of land transfer in China in recent years will also increase industry concentration. As of the first half of 2011, the country’s land transfer volume totaled 207 million mu, which accounted for 16.2% of the nation’s contracted arable land, which nearly doubled from the end of 2008. The Ministry of Land and Resources recently issued a notice requiring that the rights to rural land be confirmed before the end of the year. The acceptance of inspections is a basic preparation for deepening reforms and accelerating the circulation of rural land.

On the other hand, land transfer is a necessary condition for the scale of agricultural operations. The acceleration of land transfer will promote the transformation of China's rural small-scale peasant economy to professional cooperation, large-scale planting, and even large-scale production. Compared with small households, large-scale producers are more sensitive to the economics of production. On the one hand, they will expand the planting area of ​​economic crops and increase the efficiency of land use. Compared with ordinary field crops, the demand for fertilizers per unit area of ​​economic crops is 1.2-2.6 times; On the other hand, large households generally value the brands (guarantee quality) and technical service capabilities of agricultural suppliers, and require suppliers to have long-term investment and accumulation in channels, teams, and technologies. Currently, some leading enterprises already have First-mover advantage.

Dongkuo opened to increase chemical fertilizer prices Fertilizer industry has always been the spring plowing market, China Securities News reporter learned from compound fertilizer listed companies, the previous period due to autumn plowing after the single fertilizer prices continued to fall and staged fall in demand, the current channel overall inventory is low, and The price of single fertilizer has already bottomed out. Leading companies begin to make large-scale stocks. Some companies currently have 30% to 50% more inventory than at the end of the third quarter. With the improvement of this kind of spring planting, the leading urea companies in Shandong have started to gradually increase prices, ranging from 50-100 yuan. Urea, as a benchmark for single fertilizer demand and price, has a stable rebound in prices and marks the beginning of winter storage demand. restore.

Second, exports are expected to improve significantly in 2013. The sluggish price of single fertilizer in the second and third quarters of 2012 was mainly affected by the sluggish exports during the off-season. During the off-season this year, the prices in the international market fell and the export pressure returned to the domestic market. From January to October in 2012, cumulative exports of fertilizers fell by 9.9% year-on-year. According to sources in the industry, export improvement in 2013 was relatively certain. On the one hand, previous reports that export policies will be adjusted in 2013 will vary. According to different reporting plans, policy adjustments involve favorable factors such as lower export tariffs and fine adjustment of off-season tariff periods, although the final policy has not yet been introduced. However, the direction of policy relaxation is determined.

On the other hand, the two major factors that impacted the market price of global fertilizers gradually eased in 2012. Among them, the US natural gas price, which has a large impact on international urea prices, gradually adjusted. The current price of natural gas in the United States has rebounded by 60%-80% from the low point of the year. Researchers generally believe that natural gas prices in the United States will continue to rebound.

In addition, insufficient supply of natural gas and potential gas price increases will push up the marginal cost of ammonia/phosphorus compound fertilizer/urea industry. At present, there are still about 16 million tons (excluding Xinjiang) of gas urea in the domestic urea industry. Recently, Luzhou Dahua announced that the supply of gas was insufficient. It is understood that some southwestern gas head manufacturers have reduced their load due to insufficient gas supply or contract gas shortages. While pursuing high-priced commercial gas, the gas head urea will continue to push up the marginal cost of urea in the industry.

The compound fertilizer channel is king analysts believe that, in the short term, the entire fertilizer sector will benefit from the spring plowing market and policy-driven, and the recent rebound in the plate to a certain extent reflects this point. Coal head urea companies have the most flexibility in the spring plowing market. According to the closing price on December 10, the market capitalization ratios of Luxi Chemical, Hubei Yihua and Hualu Hengsheng have the highest market value, reaching 3.2, 3, and 2.4 tons/million respectively. The expected valuation in 2013 is between 10-12 times, with downward security margins and upward price elasticity.

Compound fertilizer is a medium- and long-term agricultural capital flow benefiting industry. China Securities Journal reporter learned from the terminal that the compound fertilizer industry has a clear trend of competition from manufacturing competition to the channel. At present, leading companies establish advantages in channels and brands, and through rich and efficient marketing. Means continue to optimize the channels, so that the sale price of products with nutrient content is high. In 2013-2014, the major compound fertilizer listed companies entered the capacity release period. The existing channel advantages ensure the release of production capacity and will enter the channel of high growth performance in the future.

Related listed companies include Kim Jung-Da, Stanley, Batian, Luxi Chemical, Xindu Chemical, Serlt and Lutianhua, etc. The first three have significant advantages in channel and marketing, and have the longest growth potential. The latter three are The upstream single fertilizer has an integrated advantage, and the short-term benefit is the most obvious. In addition, there are regional agricultural products sales leader Red Sun and Huilong shares.

Company Comments:

Luxi Chemical is a compound fertilizer manufacturer with a manufacturing advantage, but it is also a compound fertilizer manufacturer that is rapidly expanding into the channel. Currently, it has 1.8 million tons of urea and 1.5 million tons of compound fertilizer production capacity. In 2011, the company implemented the transformation of compound fertilizer marketing, carried out in-depth marketing and channel sinking, had 1,600 first-tier dealers, established franchised stores in areas known for “Luxi”** and provided technical services to farmers, and the company was in the upstream The flexibility and downstream channel strategy are quite attractive and are the preferred targets for the recent fertilizer industry.

Jin Zhengda ranked first in the market for compound fertilizer industry in 2011. The company has adopted the three channels of postal services, **, and traditional distributors to layout the national market, and multi-brand sub-channel market segmentation strategy. The current sales team has more than 1200 people and has covered major agricultural provinces. (To the county-village level), a certain degree of brand monopoly is achieved in the controlled-release fertilizer area, and the sales model of seed fertilizer simulcast has already had the characteristics of large agricultural resources (fertilizer + agricultural machinery). In 2012, the company's production capacity was 2.9 million tons (including slow-release fertilizers), and the production capacity will reach 6.4 million tons in the next two years.

Stanley has the second largest market share of domestic fertilizer in 2011. The company currently has 22 sales regions nationwide and more than 700 sales teams. There are more than 1,350 dealers at the first level (county level), covering more than 1,000 counties across the country. It is a representative of in-depth marketing in the industry. In addition, the company has the highest unit price of traditional products in listed compound fertilizer companies, with the highest per capita sales, and is currently promoting franchise sales to further strengthen channel control. The current production capacity is 2.21 million tons, and the production capacity in 2013 will reach 5 million tons.