The net profit in the first three quarters increased by 134%, and the performance was in line with expectations.
Huifeng shares released its quarterly report for 2017, with revenue of 8.939 billion yuan, an increase of 162% over the same period last year, and a net profit of 328 million yuan, an increase of 134% over the same period last year. Based on the latest equity of 1.507 billion shares, the corresponding EPS is 0.22 yuan, and the performance is in line with expectations. Of this total, 2017Q3 realized revenue of 2.89 billion yuan, an increase of 96.5% over the same period last year, and a net profit of 94 million yuan, an increase of 163% over the same period last year. At the same time, the company expects to achieve a net profit of RMB 419-506 million in 2017, an increase of 140% RMB190% over the same period last year, corresponding to a net profit of RMB 0.91-178 million for 2017Q4, an increase of 166% RMB421% over the same period last year.
Agrochemical business bottomed out and rebounded, petrochemical warehousing production boosted performance growth
During the reporting period, the increase in trade in Huifeng Petrochemical Company led to a substantial increase in revenue. Due to the low gross profit margin of petrochemical warehousing business, the company's comprehensive gross profit margin fell by 5.1pct to 7.8% in the first three quarters of 2017 compared with the same period last year. The prices of major products such as bifenthrin and prochloraz have rebounded significantly. Taking bifenthrin as an example, the average price in East China from January to September 2017 was 2303,000 yuan / ton, up 6.9% from the same period last year. In addition, due to the premium formed by the equity transfer of Nongyi, the investment income increased by 139% to 75 million yuan compared with the same period last year. During the reporting period, due to the increase in short-term bank borrowing, the company's financial expenses increased by 84.1% to 50 million yuan compared with the same period last year, and other expenses were stable as a whole.
The rise in pesticide prices continues, and the company fully benefits in the short term.
Recently, due to the influence of meetings and environmental protection factors, the overall start-up of pesticide enterprises is limited, the operation of mainstream permethrin manufacturers such as Real Madrid and Chunjiang is not good, under the overall low inventory of the superimposed industrial chain, the purchasing enthusiasm is high in the lower reaches, and the orders of raw drug manufacturers are full. Market supply is tight. On the other hand, prochloraz manufacturers raised the quotation of 95% raw powder by 0.4 thousand yuan / ton to 6.5-66,000 yuan / ton in mid-October. The company currently has bifenthrin production capacity 2000t/a, cypermethrin capacity 1000t/a, prochloraz production capacity 6800t/a, short-term is expected to fully benefit.
Convertible bond project and petrochemical phase II help the company to grow.
The company is actively building and implementing convertible bond projects (5000t/a glyphosate, 1000t/an anti-inverted ester, 2000t/a methoxyfenozide, etc.), of which the anti-inverted ester project has been put into operation in September 2016, and other projects are expected to gradually contribute to performance increment, which is expected to build a new profit growth point for the company. In addition, the company's petrochemical phase II project is expected to be put into operation by the end of the year, which will lead to revenue growth.
Maintain the "overweight" rating
Huifeng shares has a high degree of integration of the industrial chain, and in-depth cooperation with international core customers will fully benefit from the recovery of the global pesticide industry and the contraction of domestic supply, and investment projects such as glyphosate will constitute an important growth point in the future. We maintain the company's forecast of EPS of 0.28,0.33,0.38 yuan respectively from 2017 to 2019, and maintain the "overweight" rating.
Risk tips: environmental protection risk, raw material price fluctuation risk, new product sales do not meet the expected risk.
