Event
The company released the 2022 semi-annual report that H1 achieved revenue of 807 million yuan in 2022, + 6.5% year-on-year, and net profit of 92.38 million yuan, + 14.6% year-on-year. Of these, 2022Q2 achieved revenue of 412 million yuan, + 3.9% year-on-year, + 4.2% month-on-month; net profit of 50.3 million yuan, + 18.5%, and + 19.5%, respectively.
Brief comment
The performance in the first half of the year was in line with expectations, and pesticide and medicine increased steadily.
In the first half of the year, the company still maintained the three major business structures of pesticides, pharmaceutical intermediates and basic fluorine chemicals, of which H1 pesticide business achieved revenue of 320 million yuan, an increase of 33.2% over the same period last year, and a gross profit margin of 25.9%, an increase of 1.3 pct over the same period last year; pharmaceutical business achieved revenue of 150 million yuan, an increase of 26.7% over the same period last year, with a gross profit margin of 31.7%, a decrease of 1.6pct over the same period last year The revenue of basic chemical industry reached 280 million yuan, down 0.9% from the same period last year, and the gross profit margin was 15.0%, down 3.8% from the same period last year. Among them, the growth of pesticide business is mainly due to the increase in foreign demand of 2meme 3reel 5je 6-series and the recovery of 2pyr6-difluorobenzamide market, while the decline of basic chemical gross profit margin is mainly due to the year-on-year rise of raw materials. H1 new materials and electronic chemicals business achieved revenue of 8.15 million yuan, down 80% from the same period last year, gross profit margin of 0.5%, a year-on-year decline of 44.7pct, mainly due to reduced demand from BPEF series terminals and order negotiations.
Continuous upstream layout to ensure the long-term development of the company
The company completed the extended layout of upstream resources through the acquisition of Gaobao Technology and Sun Changxing fluorite in 19 years, with a production capacity of 60,000 tons of fluorite and 50,000 tons of hydrofluoric acid at that time. At present, Changxing fluorite has been proved to be more than 900,000 tons, with a mining area of 2.01 square kilometers. Changxing fluorite started the expansion project of 80,000 tons of raw fluorite ore and 40,000 tons of fluorite concentrate at the end of 2020, and started mining in the fourth quarter of 2021. The company's 30,000 ton hydrofluoric acid production line is expected to be installed and put into production in November 2022, and Gaobao's hydrofluoric acid expansion project will be completed in the third quarter of 22. The continuous input of upstream resources provides strategic support for the company's expansion. As the price of sulfuric acid falls, the profit of hydrofluoric acid will be repaired gradually.
Multi-projects under construction to accelerate the transformation of new energy
At present, the company relies on many years of technical experience in the production and research and development of fluorine chemical industry, focusing on the construction and production of new energy chemicals represented by sodium hexafluorophosphate, lithium difluorosulfonimide, lithium bis-trifluoromethylsulfonimide, as well as 2pens, 4pens, 5-trifluorine series products, so that the company moves forward to high-end products. In terms of construction projects, the company's 5000 tons of DFBP, 20 thousand tons of fluorobenzene and 3000 tons of 4-fluorobenzoyl chloride are expected to be gradually put into production by the end of 2022. Subsidiary Gaobao Technology's "21000 tons New electrolyte material Project" (including 10,000 tons of sodium hexafluorophosphate and 5000 tons of LIFSI) and Jiangxi Exxon's "15000 tons of fourth-generation refrigerants and 10,000 tons of R134a" project is expected to be put into production in 2023, contributing greatly to the incremental performance. Help the company to realize the transformation and upgrading of downstream high value-added fine chemicals.
Profit forecast and valuation: on the one hand, the company extends hydrofluoric acid and fluorite to build resource advantages, on the other hand, it distributes new energy electrolyte materials and fourth-generation refrigerants to achieve substantial expansion of business. It is estimated that the company's net profit from 2022 to 2024 will be 2.07,4.49 and 627 million yuan respectively, corresponding to PE of 33.5X, 15.5X and 11.1X respectively, maintaining the "buy" rating.
Risk Tips:
Raw material prices fluctuate; downstream demand falls short of expectations; industry competition intensifies; project production falls short of expectations.