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According to the mid-17 year report, the company's income in the first half of the year was 2.8 billion yuan, down 7%, and the net profit was 200 million yuan, down 45.6%. It is expected that the fluctuation range of the first three quarters is 2.3-320 million yuan.

Main viewpoints

1. The decline in sales volume and the growth of sales costs caused a sharp decline in performance affected by the downstream agricultural downturn, and the substitution effect of elemental fertilizer on compound fertilizer was enhanced, resulting in a decline in compound fertilizer sales in the first half of the year compared with the same period last year, dragging down overall income, while gross profit margin fell 6PCT to 21.4%. According to the category, the revenue of chlorine-based compound fertilizer fell by 23.9% to 1.38 billion yuan compared with the same period last year, the gross profit margin decreased slightly by 2.7PCT to 23.8%, the revenue of sulfur-based compound fertilizer increased by 11.6% to 600 million yuan, and the gross profit margin decreased by 2.7PCT to 22.6%. The business income of BB fertilizer and raw material fertilizer has increased, but the gross profit margin has declined more. In the first half of the year, the management fee fell to 5.56%, while the sales rate increased by 1.6PCT to 8.7%, which was a drag on the company's performance growth.

two。 With the sharp decline in inventory and the introduction of cash crop fertilizer, it is expected that the company's inventory situation will improve significantly in the first half of next year, down 230 million yuan to 1.05 billion yuan compared with the first quarter, accounts receivable also reduced to 115 million yuan, and the quality of operation has improved. In the first half of the year, the company launched a series of efficient cash crop fertilizers, which were promoted through channels and agrochemical services. according to the results of our grass-roots research, sales in East China have increased significantly and are expected to be released next year.

3. Investment suggestion

We expect the company's 17-18 year performance to be 360 million yuan and 400 million yuan respectively, corresponding to EPS0.29, 0.35, the current stock price corresponding to PE 25X, 21X, recommended rating.

4. Risk Tips:

Recovery of agricultural products was lower than expected