Net profit increased by 146.1% in 2017, and the performance was in line with expectations.
Huifeng shares released its 2017 results KuaiBao, with annual revenue of 12.322 billion yuan, an increase of 111.0% over the same period last year, and a net profit of 429 million yuan, an increase of 146.1% over the same period last year. The performance is in line with expectations and is also within the 140% 190% range of the previous performance forecast. According to the latest share capital of 1.507 billion shares, the corresponding EPS is 0.28 yuan. The 2017Q4 net profit of the corresponding company was 101 million yuan, an increase of 223.1% over the same period last year. Combined with the company's performance KuaiBao, 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.
Performance improvement of pesticide department and return on equity investment led to a great increase in performance.
We estimate that the company's net profit growth in 2017 is mainly due to: 1) during the reporting period, the company's main pesticide products, such as bifenthrin and prochloraz, continued to rise. Take bifenthrin as an example. According to Baichuan Information, the average price of 97% bifenthrin in East China in 2017 was 2412,000 yuan / ton, up 37.9% from the same period last year. Especially since the fourth quarter, with the pick-up of demand and increased pressure on environmental protection, domestic pesticide prices have risen generally, and the company's performance is fully flexible. 2) Huifeng Petrochemical Company's oil products and chemicals trade volume increased, leading to a substantial increase in the company's income and corresponding thickening performance. 3) the confirmed investment income from the equity transfer of Nongyi Network is 57 million yuan.
Convertible bond project and petrochemical phase II help the company to grow.
The company is actively building and implementing convertible bond projects (5000 tons of glyphosate, 1000 tons of anti-inverted ester, 2000 tons of methoxyfenozide, etc.), of which the anti-inverted ester project has been put into operation in September 2016, and the rest of the project has also been put into production in 2017Q4, among which the glyphosate project is expected to gradually increase the load and contribute to the performance increment. In addition, the company's petrochemical phase II (16.2 million square meters) project was also put into operation in January 2018.
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. Starting from 2018, China began to implement the new enterprise pollution discharge permit system, superimposed the gradual implementation of environmental protection tax, the supply side of the pesticide industry is expected to continue to concentrate in the future, the price center of pesticide raw drugs is expected to continue to rise, and the company's performance flexibility is expected to continue to release. Combined with the company's performance KuaiBao, 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.
