The company deducted non-net profit of 229 million yuan in the first quarter of 2023, an increase of 50.1% over the previous year. Main revenue was 1,346 million yuan, up 5.61% year on year; Guimu's net profit was 218 million yuan, up 31.84% year on year. The increase in revenue was mainly due to: 1. Blueberry sales revenue increased from 6.06 million yuan in the same period last year to 137 million yuan in the current period; 2. The number of holding dealers decreased from 36 in the same period last year to 27 at present, which also reflected a decrease in sales revenue of 53.96 million.

In 2022, the company deducted non-net profit of $215 million, a year-on-year decrease of 3.95%. Revenue was 4.265 billion yuan, a decrease of 5.23% over the previous year; Guimu's net profit was 328 million yuan, an increase of 7.57% over the previous year. The calculation of asset impairment will reduce the company's total profit in 2022 by 76.863 million yuan, leading to a reduction in owners' equity of 76.863 million yuan at the end of the reporting period. The company's preparation for depreciation of the above assets will help to comprehensively and fairly reflect the asset situation of the enterprise, improve the quality of the enterprise's accounting information, and will help consolidate the quality of the assets.

By business, the consolidated revenue of the 2022 pharmaceutical business was 2,707 billion yuan, an increase of 1.33% over the previous year. There were 27 holding dealers in Tiantian Quan's consolidated statements (36 in the same period last year), with consolidated revenue of 1,398 billion yuan, a year-on-year decrease of 19.05%. The consolidated revenue of Hyundai's specialty fresh consumption report was 161 million yuan, an increase of 56.50% over the previous year.

Vigorously developing fresh food consumption business with modern characteristics is expected to become a new profit growth point.

The company currently has about 30,000 acres of grassy blueberries in Yunnan, about 3,000 acres of bird's nest fruit land in Hainan, and about 7,000 acres of dragon fruit in Sanya. Among them, dragon fruit in Sanya was first harvested in 2021 and officially put into production in 2022; blueberries completed the construction and planting of the first park in May 2021, and the first output was obtained in the first quarter of 2022. The production area for the 2023 production season is expected to be about 6,000 acres, and the production area for the 2024 production season is expected to exceed 20,000 acres; bird's nest fruit has now been planted, and production is expected to begin early next year. In the context of consumption upgrading, demand for high-quality agricultural products is increasing, there is a large gap in supply, and the profitability of products is impressive. We believe that in the future, as several specialty crops are put into production in large quantities, it is expected to bring a considerable increase in the company's performance.

Profit forecast and valuation: The difference in demand in the pesticide industry is lower than expected, and we lowered our performance. We forecast the company's net profit to the mother in 2023-2025 to be 4.40 (-3%), 5.96 (0%), and 822 million yuan (newly introduced), respectively. The rapid growth and high growth of the company's specialty crops gave a certain valuation premium. We gave the company 23.5 times PE in 23 years, corresponding to the target price of 10.34 yuan (previous target price of 7.76 yuan, based on 25 times PE in '22, +33%), maintaining an investment rating of “superior to the market”.

Risk warning. Prices of raw materials for pesticide formulations have fluctuated greatly, the boom in the planting industry has declined, and production progress of specialty crops has fallen short of expectations.