Main points of investment:
In the first half of the year, the revenue of 713 million yuan increased by 38% over the same period last year, and the net profit of 13 million yuan increased by 34.2% over the same period last year.
The main business turns losses into profits, but the profitability of the main business is relatively poor.
The new major shareholder has a large volume of business, and the potential asset injection is the biggest focus.
Summary of the report:
The reported income of 713 million yuan increased by 38%, and the net profit of 13 million yuan increased by 342%. Of this total, insecticide income of 220 million yuan increased by 7.3%, gross profit margin of 6.62% increased by 0.5%, herbicide income of 250 million yuan increased by 3.37%, gross profit margin of 17.2% increased by 11.6%, fungicide income of 33 million yuan increased by 77%, and gross profit margin of 28% increased by 0.6%.
The profitability of the company's pesticide business is not strong. In the first half of this year, the prices of pesticide varieties represented by glyphosate and paraquat continued to rise, the profitability of pesticide enterprises generally enhanced, and the prosperity of the industry rose rapidly. However, although the company turned around its main business and its net profit soared by 342%, this was mainly due to a low base last year, with a 15% gross profit margin and 1.9% net profit margin still lagging behind in the industry.
The operating ability of the company casts a shadow over the profitability of the fundraising project. In the company's additional issuance project, the net profit margin of the ion-exchange membrane caustic soda project of 300000 tons is expected to be 16%, and the net profit margin of the "rich every year" distribution center project is 7.6%, which is much higher than the current profitability of the company's main business. Taking into account that the company's main pesticide products are currently in a high boom in the industry, and the market prospect of the fund-raising project products is relatively general, so the risk that the profit of the fund-raising project does not meet expectations has increased.
The key to the transformation of the company from black chicken to Phoenix is the support of major shareholders. Huaxin Petroleum, the company's new major shareholder, has a large scale of business, involving international and domestic trade in petrochemical raw materials and additives, has a 12 million cubic meter oil reserve base in Hainan, and large-scale coal chemical projects in Xinjiang have also reached preliminary cooperation intentions with customers. it is possible to inject suitable assets into listed companies in the future.
Profit forecast and valuation. We are cautiously optimistic about the company's future development prospects. It is estimated that the company's EPS for 13-15 years will be 0.15, 0.20, 0.27 yuan respectively, maintaining the overweight rating, with a target price of 9.50 yuan.