Event: on August 27, the company released its semi-annual report 2021. In the first half of 2021, the company achieved revenue of 1.038 billion yuan, an increase of 7.47% over the same period last year; net profit of 59.26 million yuan, down 38.2% from the same period last year; and net profit of 54.34 million yuan, down 48.6% from the same period last year. Of this total, 2021Q2 achieved revenue of 592 million yuan, down 1.0% from the same period last year, up 32.6% from the previous year, and realized net profit of 38.56 million yuan from the same period last year, down 45.6% from the same period last year and up 86.3% from the previous year.
Comments:
Product prices are lower, raw material costs are rising, and the company's performance is under pressure. The company's 2021H1 homing net profit decreased by 38.2% compared with the same period last year, mainly due to the reduction in the price of the company's main products, enoxone and enoylmorpholine.
The prices of 2021H1, enoxone and enoylmorpholine products decreased by 22.2% and 30.7% respectively compared with the same period last year. Although the sales of enoxone and enoylmorpholine increased by 33.2% and 66.5% respectively compared with the same period last year, the overall sales increased by only 6.2% and 15.4% respectively. At the same time, at the cost end of raw materials, the purchase prices of o-chlorobenzyl chloride, morpholine and crotonaldehyde increased by 41.3%, 20.6% and 7.5% respectively, which also reduced the profit space of the company's products to a certain extent. In addition, the decline in sales of products such as imidacloprid and dioxin further aggravated the pressure on the company's performance. Sales of 2021H1, mifenac and clenbuterol fell 48.0% and 29.1% respectively from the same period last year, resulting in a 45.1% and 33.5% year-on-year decline in sales.
Production capacity construction is progressing smoothly and the company still has room for development. Although the company's performance is affected by the price fluctuations of the main products, the company's new capacity project is progressing smoothly. Liaoning first reaches the first phase with an annual output of 3000 tons of enoxone and an annual production line of 2000 tons of enoylmorpholine with smooth trial production and smooth release of production capacity. In addition, the second phase of the production line with an annual output of 5000 tons of enoxone is scheduled for trial production in 2021 to further consolidate the dominant position of the company's main products in the industry. With the release of the production capacity of the company's completed projects and the gradual commissioning of the capacity under construction, the company's production strength is expected to reach a new level. In addition, from the macro level, the Central Economic work Conference proposed to "solve the problem of seeds and cultivated land" to effectively ensure the strategic needs of national food security, the pesticide industry as a whole will still show a good trend of development.
Profit forecast, valuation and rating: the company's 2021H1 performance is obviously under pressure due to the significant reduction in the prices of its main products, enoxone and enoylmorpholine, as well as the reduction in sales of imidacloprid and dioxin, superimposed on the upward cost of raw materials. At present, the prices of enoxone and enoylmorpholine are still in a low position, so we downgrade the company's profit forecast for 2021-2022, and add 2023 of the company's profit forecast. The company is expected to achieve net profit of 1.29,2.08 (down 47.9%) and 244 million yuan respectively from 2021 to 2023, corresponding to EPS of 0.58,0.94,1.10 yuan per share, respectively. We are still optimistic about the rebound in performance brought about by the release of production expansion capacity, such as enoxone, and still maintain the company's "buy" rating.
Risk hint: product price fluctuation risk, downstream demand is lower than expected, capacity construction is not as expected