Performance preview
Forecast that profit in 2021 will increase by 344% over the same period last year.
The company forecasts a net profit of 26.0 to 2.7 billion yuan in 2021, an increase of 344 percent over the same period last year, of which 4Q21 made a profit of 10.0-1.1 billion yuan in a single quarter, slightly exceeding market expectations. The company believes that the prices of major products, including glyphosate, silicone and industrial silicon, have risen sharply compared with the same period last year, leading to a significant increase in the company's profitability compared with the same period last year. In addition, the company said that the layout of middle and high-end products has also made positive progress, with a substantial increase in product sales compared with the same period last year, effectively improving the company's business performance.
Pay attention to the main points
Broad-spectrum herbicides out of the historic market, 1H22 may remain high: in 2021, against the backdrop of higher grain prices and a rebound in crude oil prices, broad-spectrum herbicides walked out of the historic market, with glyphosate prices rising to 80,000 yuan / ton and glyphosate prices rising to 370,000 yuan / ton. Looking ahead, we believe that strong overseas demand for glyphosate will continue, and 1H22 annual broad-spectrum herbicide prices may remain relatively high.
The rebound in silicone prices is expected to continue: 4Q21 silicone prices fluctuated sharply, and DMC prices continued to decline until mid-December after rising sharply to more than 60,000 yuan / ton in October. Entering 2022, DMC prices have begun to rebound due to strong demand for replenishment. As of January 10, DMC prices have rebounded to 30,000 yuan / ton, up 27% from December 21's low. Looking ahead, given that silicone inventories are still low, inventory replenishment demand will continue, and some companies on the supply side will stop for maintenance, we believe that the rebound in silicone prices is expected to continue.
Capital expenditure remains high and growth is still underestimated: after clarifying the management structure, the company has entered a new round of capital expenditure cycle. 1-3Q21's capital expenditure has increased by 48.9% year-on-year, and we believe that the company's medium-and long-term growth can still be expected. Among them, the company's key project glyphosate and industrial silicon project is progressing smoothly, we expect the first phase of 1Q22 glyphosate production capacity of 3000 tons, 2Q22 Yunnan 100000 tons of industrial silicon project will be officially put into production, at that time, glyphosate will become a new performance growth point of the company's agrochemical business, industrial silicon to meet the premise of self-use can also be supplied to more polysilicon enterprises.
Valuation and suggestion
As the price of 4Q21 glyphosate remains high, we raised the company's profit forecast for 2021 to 2.62 billion yuan, kept the profit forecast for 2022 unchanged at 2.63 billion yuan, and introduced a profit forecast of 2.88 billion yuan for the first time. The current share price corresponds to a price-to-earnings ratio of 7.6 times earnings for 2022 Universe in 2023. We maintain the outperform industry rating, taking into account the glyphosate price 2H22 there is some uncertainty, lowering the company's target price by 27% to 35 yuan, corresponding to 43% rising space and the price-to-earnings ratio of 10.9 in 2023.
Risk.
The price of glyphosate has dropped sharply, and the production of the new project has fallen short of expectations.