Event
The company released its three-quarter 2017 report on the evening of October 22nd. In the first three quarters, the company achieved revenue of 8.939 billion yuan, an increase of 162.39% over the same period last year. The net profit returned to its mother was 328 million yuan, an increase of 134.08% over the same period last year. Of this total, Q3 achieved revenue of 2.89 billion yuan in the single quarter, an increase of 96.49 percent over the same period last year, and a net profit of 94 million yuan, an increase of 163.10 percent over the same period last year, and an increase of 10.02 percent over the previous year.
It is estimated that the net profit for the whole year of 2017 will be 4.2-3.5 billion, an increase of 140% over the same period last year.
Brief comment
Pesticide and petrochemical double growth, performance soar
Since the second half of 2016, affected by multiple factors such as environmental protection inspectors, production restrictions by enterprises, increased market demand driven by overseas inventory replenishment, and the promotion of relevant policies of the pesticide industry, the pesticide industry has gradually come out of the trough. Since the beginning of this year, the supply side of the pesticide industry has continued to maintain a clear production capacity and environmental protection pressure, while the demand side is not just replenishing inventory, global crop prices have gradually stabilized and rebounded, and crop acreage has come out of the trough. The overall demand of the downstream industry began to recover. As one of the top 10 pesticide companies in China, driven by the prosperity of the industry, the main products imidamide, octanoyl bromobenzonitrile and bifenthrin all increased in varying degrees. The company's petrochemical business continued to achieve substantial growth. Petrochemical Phase I contributed 2.5 billion in revenue when it was put into production in the second half of 2016, and the revenue showed at least double growth in the whole of this year, driving the company's revenue in the first three quarters of 8.939 billion yuan. the year-on-year increase was 162.39%, and the return net profit was 328 million yuan, an increase of 134.08% over the same period last year. Although the company's comprehensive gross profit margin in the first three quarters was only 7.78%, down 5.14% from the same period last year, it is mainly due to the dilution effect brought about by the sharp increase in petrochemical business with low gross margin.
In terms of three fees, the sales expense rate / management expense rate / financial expense rate was 1.06%, 2.32% and 0.56% respectively, which was 0.24 percentage points lower than that of the same period last year.
Pesticide subdivision variety leader, complete industrial chain has outstanding advantages.
The company is the leading pesticide subdivision in China, and has become the largest manufacturer of prochloraz in the world, the largest manufacturer of octanoyl bromobenzonitrile and fluconazole in China, and has a complete industrial chain of crude drug intermediate-crude drug-preparation. In recent years, the company has gradually realized the integration of the industrial chain through epitaxial mergers and acquisitions: the company has successively acquired imidazole and phenol manufacturers, and has a production capacity of 20,000 tons of phosgene, forming an imidazole-imidamide industrial chain; in 2011, it acquired Kofite and Huatong successively, and completed a complete industrial chain of kung fu acid / biphenyl alcohol-biphenyl / permethrin. At the same time, it has the industry chain of p-hydroxybenzoic acid-octanoylbromobenzonitrile, the self-sufficiency of key intermediates reduces the raw material supply risk caused by environmental protection, and is conducive to the company's cost control. In the fourth quarter of 2017, with the suspension of production in the wrong peak season brought about by air pollution control in February 26 cities, most pesticide enterprises in Shandong and Hebei will be affected to varying degrees. At that time, not only the supply of raw drugs will be affected. Pesticide intermediates will also be greatly affected, and the company is expected to achieve a simultaneous increase in volume and price when other enterprises are subject to the shortage of upstream intermediates due to the shortage of upstream intermediates. It led to continued growth in the fourth quarter. It is expected that in the future, with the production capacity of small and medium-sized enterprises that do not meet the standards of environmental protection in the industry, the company's market share is expected to further increase.
Convertible bond projects have been put into production one after another, and the performance is expected to grow high in the future.
In 16 years, the company issued convertible bonds and raised 845 million yuan, mainly invested in 5000 tons of glyphosate, 1000 tons of anti-inverted ester, 2000 tons of methoxyfenozide project. Benefiting from paraquat ban and glyphosate resistance, glyphosate is expected to open up a broad market space; anti-inverted ester and methoxyfenozide are also new pesticides with great potential in the future. The 1000-ton anti-inversion ester project has been put into production in 16 years, and the glyphosate and methoxyfenozide projects will also be put into production in the fourth quarter of this year. The current net profit per ton ordered by the price of glyphosate is expected to exceed 50,000 yuan per ton, which will greatly increase the company's performance after it is put into production. In addition, the company completed the equity transfer to the subsidiary Jiangsu Tulip in 16 years, divested the sustained loss-making platform of Nongyi Network at the beginning of this year, optimized the company's industrial structure, highlighted the main business, and was conducive to the long-term development of the company.
Continuous volume of warehousing projects to achieve "two-legged" walking
The petrochemical warehousing project built by the company with over-raised funds has entered the normal operation stage in 2016. in the second half of last year, the company's petrochemical first phase project 148,000 square storage business (raw materials and intermediates for agrochemical production, oil trading business). The revenue contributed 2.5 billion yuan that year, accounting for 43% of the company's total revenue, and the sales revenue increased rapidly compared with the same period last year, becoming a stable growth point of business profits for the company. The second phase of the project is under construction and will bring new economic growth points to the company in the future.
It is estimated that the EPS from 2017 to 2018 will be 0.30,0.36 yuan respectively, corresponding to 20x and 16x PE, and will be given a buy rating.
