Event: the company released the third quarter report of 2017, with revenue of 8.94 billion yuan (+ 162.39%) and net profit of 228 million yuan (+ 134.08%) in the first three quarters of 2017.
The company's annual performance guidelines are 4.2-500 million yuan, 140% MUE 190% compared with the same period last year.
The performance is growing steadily, and the annual performance is expected to fall into the guidance range: the company's quarterly income in the third quarter is 2.889 billion yuan, which is the same as that in the second quarter, with a profit of 94 million yuan, an increase of 10 million yuan compared with the second quarter. The actual performance in the first three quarters falls within the semi-annual performance guidance range. Due to the trial production of the equipment after the trial production of the methamidophos project, there is no large-scale shipment in the third quarter, and the contribution to the performance is limited.
We believe that the lower limit of 420 million yuan in annual performance guidelines is relatively conservative, and the fourth quarter is the peak season for exports and stockpiling, and the single-quarter performance is expected to be significantly higher than that in the third quarter. At the same time, environmental protection-driven pesticide prices rise again, and product profits are expected to increase in the fourth quarter. Assuming that the warehousing business is still stable, we believe that the company's annual performance is likely to fall into the middle of the guidance range, and the annual performance center is expected to be 460 million yuan.
A number of projects such as methamidophos are about to be put into production, and the performance is flexible: according to the company's report, the company's 1000 tons of anti-inverted ester project has been put into production, and 5000 tons of methoxyfenazide will also be put to the ground one after another. it is expected that it will be opened soon. At present, the overall supply of raw drugs is tight, and the unit price of methamidophos has exceeded 170000 yuan. Once the volume of the new project is released, the performance is very flexible.
The warehousing business will also steadily contribute to profits: the company's warehousing business is the main reason for the high revenue growth. According to the semi-annual report on the company's warehousing business gross profit margin of 1.7% and gross profit of 63 million yuan, it is expected that the company's warehousing business will steadily contribute to profits. The second phase will further accelerate the company's performance growth when it is completed next year.
Investment suggestion: combined with the high level of pesticide in the fourth quarter, combined with the future warehousing business and the commissioning of new projects, we believe that the company's expected profit for 2017-19 is EPS of 0.30,0.40 and 0.45 yuan, maintaining the Buy-An investment rating. The target price for six months is 7.46 yuan.
Risk hint: the scene of alachlor has declined, and the recovery of the pesticide industry is not as expected.
