QSLI:FY15results in-line;maintaining Hold发布时间：2016-04-21 研究机构：德意志银行
FY15 net income down 57% YoY
Mixed bag in potash segment: GPM up but sales volume down In its FY15 results QSLI posted net income of RMB559mn or EPS of RMB0.35/share, down 57% YoY but in-line with our estimates and the company’s guidance. QSLI declared a DPS of RMB0.031, implying a payout ratio of 10.3%, on par with 10.5% in 2014. The sharp decline in net income was driven by 1) a loss in the chemical segment, 2) impairment losses, and 3) an increase in financial and SG&A expenses. If we exclude asset impairment of RMB1,150mn (+72.5% YoY) on inventory loss of RMB989mn (vs. RMB637mn in 2014) and fixed asset impairment of RMB140mn, QSLI’s operating income would have only dropped by 6% to RMB2.35bn.
Mixed bag in potash segment: GPM up but sales volume down
QSLI’s potash segment GPM improved by +5.4%points YoY to 73.7% in 2015 on the back of 1) higher production volume, with continuous production during the winter season, and 2) stringent cost control. Potash revenue increased by 2% YoY to RMB7.88bn with ASP of RMB1,777/ton (+4% YoY). Stringent cost control reduced potash unit production cost by 13.3% YoY to RMB468/ton. QSLI produced 5.21mnton of potash, up 12% YoY, but recorded sales of 4.43mnton, down 3% YoY. Potash inventory as of 2015 increased by 66.52% to 1.45mnton.
Chemicals loss widened, but gross loss margin narrowed
The chemicals segment loss is a key drag on earnings. QSLI recorded a loss of RMB1.54bn for chemical integration project phase 1&2, whereas last year it reported a loss of RMB0.71bn for chemical integration project phase 1 (+116% YoY). On the bright side, chemical GPM narrowed by 0.93%points to -22.02%, thanks to a natural gas cost cut in Nov 2015. The company limited the loss in chemical projects by suspending ADC production of Salt Lake Haihong in July 2015. Conversely, its lithium carbonate production surged by 117.3% YoY and reached 3,705 tons in 2015, while production unit cost declined by 29% YoY to RMB28,966/ton.
Valuation and risks; maintaining Hold rating with PT of RMB20.0
We maintain our Hold rating with our DCF-derived PT of RMB20.0/share, implying 1.4x FY16E P/B. The stock trades at 1.30x FY16E P/B, slightly higher than -1SD below the historical average. Key risks: sluggish chemical prices and demand could lead to further inventory write-downs and asset impairments in FY16E.