Event: The company released its 2022 mid-year report on August 29, 2022. 2022H1 achieved operating revenue of 1,809 million yuan, an increase of 40.80% over the previous year, and achieved net profit of 231 million yuan attributable to shareholders of the parent company, an increase of 2828 million yuan over the previous year.
76% achieved net profit of 223 million yuan after deduction, an increase of 1431.25% over the previous year.
Commentary:
The boom in the vitamin industry chain is compounded by the release of phenol projects, and the Q2 relay Q1 performance continues to soar. The company's 2022H1 revenue was +40.8% year on year, and net profit was +2828.76% year on year, mainly due to rising prices of some vitamins, chrome salts, hydroquinone and other products and increased sales of fragrance products. According to Wind, the average prices of 2022H1 vitamin K3 and calcium pantothenate were 186 yuan/ton and 349 yuan/ton, up 165% and 378% year-on-year; the average prices of 2022Q2 vitamin K3 and calcium pantothenate increased 6% and 19% month-on-month. At the same time, the production capacity of the company's “Construction Project with an Annual Output of 20,000 Tons of Phenol and 31,100 Tons of Benzodiol Derivatives - Phase I Project” was further released, operation was continuously optimized, and the prices of major products rose, and the benefits of the project were gradually released. 2022Q2's revenue was 930 million yuan, +56.14% year on year, +5.78% month on month; Q2 net profit was 128 million yuan, +751.9% year on year, +23.88% month on month. Both revenue and net profit reached record highs in a single quarter. 2022H1's gross profit margin and net sales margin have all steadily rebounded. Among them, gross sales margins Q1 and Q2 were 27.72% and 28.59% respectively; net sales margins for Q1 and Q2 were 11.72% and 13.72% respectively. The company invested 63.24 million yuan in R&D, +58.73% over the same period last year.
By business, 2022H1's pharmaceuticals and food products (mainly including vitamins, essences, fragrances, pharmaceuticals, etc.) achieved revenue of 1,132 billion yuan, +44.95% year on year, accounting for 62.56% of operating income, up 1.8 pct from the same period last year, gross margin was 44.95%, up 17.7 pct year on year; specialty chemicals (mainly including leather chemicals, chrome salt and other products) achieved revenue of 632 million yuan, +35.54% over the same period last year, accounting for 34 percent of revenue.
96%, down 1.4pct from the same period last year, gross profit margin was 35.54%, up 14.3pct year on year. 2022H1's overseas sales grew rapidly, achieving revenue of 1,029 billion yuan, +60.62% over the same period last year. The share of operating income increased to 56.9% from 49.8% in the same period last year. At the same time, the gross margin of overseas sales was 33.35%, an increase of 15 over the previous year.
25pct
The performance has been gradually verified, and there is broad room for transformation and growth. As an important supplier of vitamins around the world, the company has embarked on a path of transformation and upgrading in recent years, continuing to promote fine chemicals represented by flavors and fragrances, and pharmaceutical raw materials projects represented by iodine contrast agents. The “Construction Project with an Annual Output of 20,000 Tons of Phenol and 31,100 Tons of Benzodiol Derivatives - Phase I Project” was put into operation in 2020, and the production capacity release rate of major products reached over 74%. Construction of the second phase of the project officially began in the first half of 2022. After completion, it will further enhance the overall competitiveness of the company's “phenyldiol” industry chain. The “Construction Project with an Annual Output of 1000 Tons of Iodine Contrast Agents and Intermediates - Phase I Project” project was put into operation in 2020. Currently, all major users of iodine contrast agent intermediates have been certified and commercialized, and the API report and approval process is underway. The company's new layout of new businesses, such as fine chemicals and pharmaceutical intermediates, has higher added value and a better competitive pattern. As performance is gradually realized, the company has more and more room for growth.
Profit forecast: The company's net profit for 2022-2024 is estimated to be 501 million yuan, 780 million yuan, and 890 million yuan respectively. The corresponding PE is 14, 9, and 8 times, respectively, giving a “buy” rating.
Risk warning: Prices of vitamin products are falling, the release of production capacity in the fine chemical sector falls short of expectations, raw materials have risen sharply, and approval and sales of APIs have fallen short of expectations.