Performance review
1H22 performance is in line with our expectations
The company announced 1H22 results: revenue of 13.34 billion yuan, an increase of 57.7% over the same period last year; net profit of 2.33 billion yuan, an increase of 181.7% over the same period last year, corresponding to earnings per share of 2.04 yuan, which is in line with our expectations.
Among them, 2Q22 achieved an income of 6.84 billion yuan, an increase of 47.0% over the same period last year, and a net profit of 1.11 billion yuan, an increase of 102.3% over the same period last year.
The 1H22 plant protection plate achieved revenue of 7.15 billion yuan, an increase of 88% over the same period last year, glyphosate discounted crude drug sales of 46000 tons, an increase of 12.2% over the same period last year, and the silicon-based plate achieved revenue of 4.445 billion yuan, an increase of 36% over the same period last year. The terminal conversion rate of silicon-based materials reached 41%, and medium and high-end products accounted for 48%.
Trend of development
2H22 glyphosate industry is still expected to maintain a high level of prosperity. According to Baichuan Information, the average price of 2Q22 glyphosate is 64,000 yuan / ton, down 12.2% from the previous month. However, due to the decline in the price of glycine and other major raw materials, corporate profits remain at a high level. We estimate that the profit per ton of 2Q22 glyphosate industry is still close to 20,000 yuan / ton. Since July, the glyphosate industry has entered the off-season, and the price has fallen somewhat, but looking forward, we judge that with the advent of the peak planting season in the fourth quarter, the prosperity of the glyphosate industry may pick up, so on the whole, we think that the prosperity of the 2H22 glyphosate industry is still expected to remain at a high level. The company currently has a production capacity of 80,000 tons of glyphosate and is expected to fully benefit from the high profits brought about by the prosperity of the glyphosate industry.
Layout of new energy materials to create a new growth curve. Following the company's investment of 75.57 million yuan in February to obtain a 20% equity layout of lithium iron phosphate industry chain, the company's board of directors also recently agreed to set up a wholly-owned subsidiary "Zhejiang Qiyuan New Materials Co., Ltd. (tentative name)", aiming at key raw materials and special additives for electrolytes, negative materials such as graphite and silicon carbon, and graphitization. Through project self-construction, foreign cooperation and other ways to further improve and expand the layout of chlorine, phosphorus and silicon in the field of new energy materials, and extend existing products and technologies to new energy materials and solutions. We believe that with the follow-up gradual realization of the new energy layout, the new energy materials business is expected to become the company's agrochemical / silicon-based materials business in addition to the third growth curve.
Profit forecast and valuation
Keep profit forecasts for 2022 and 2023 unchanged. The current share price corresponds to a price-to-earnings ratio of 7.4 times 2023 / 7.1 times earnings for 2022 Universe. Maintain an outperform industry rating and target price of 25.00 yuan (excluding equity increase changes), corresponding to 9.3 times 2022 price-to-earnings ratio and 9.0 times 2023 price-to-earnings ratio, which has 26.2% upward space compared with the current stock price.
Risk.
The price of glyphosate fell sharply and the progress of the new business fell short of expectations.