Event
According to the company's annual report for 2017, the operating income during the period was 801 million yuan, an increase of 12.15 percent over the same period last year. The net profit attributed to shareholders of listed companies was 105 million yuan, down 25.82 percent from the same period last year, and basic earnings per share was 0.418 yuan per share. The total assets of the company are 1.64 billion yuan, the net assets belonging to the shareholders of the listed company are 759 million yuan, the net assets per share are 3.02 yuan per share, and the weighted net asset income is 14.89%.
The annual report results are lower than expected, waiting for the 2018 results to welcome spring blooming company's revenue of 801 million yuan (+ 12.15%), of which more than 85% comes from the vitamin raw material medicine business (VB2), achieving a net profit of 105 million yuan (- 25.82%), and the annual performance is lower than expected. This is partly due to the increase in R & D expenses, the centralized provision of asset impairment losses and the increase in corporate income tax expenses. In addition, last year, VB2 prices fluctuated in a wide range, before low and then high, and prices continued to decline in the first half of the year. In the second half of the year, due to the continuous tightening of environmental protection policies and the environmental impact of large-scale vitamin price increases, prices bottomed out and rebounded. In the fourth quarter, prices exceeded 400 yuan / kg. The company's VB2 international export orders are usually signed at least one quarter in advance, and the performance reflects a lagging price increase cycle of 1-2 quarters. We believe that the current disadvantages to the development of the company have basically been exhausted, the unstable factors of management have been eliminated, the new chairman, an Jing, has taken office, the asset impairment has been completed, and the company has recently been certified as a high-tech enterprise; at present, the market price of VB2 remains high, waiting for the results to bloom in the spring this year.
VB2, the global leader, enjoys the dividend of product price increase.
At present, the company's total VB2 production capacity is about 4800 tons (80% powder, the same below), the two major production bases: Daijin Industrial Park 2300 tons, Mengzhou Company 2500 tons, of which Daijin Industrial Park mainly produces food and pharmaceutical grade VB2, Mengzhou base mainly produces feed VB2. The total global VB2 production capacity is about 10000 tons, and the main production enterprises are Guangji Pharmaceutical Co., Ltd., 4800 tons, DSM2000 tons, and BASF 1500 tons. The total capacity of the three enterprises has reached 8300 tons, exceeding 80% of the global production capacity, showing a three-oligopoly pattern. The company's production capacity accounts for nearly 50% of the world's total production capacity and is the absolute leader of VB2 in the world. In terms of exports, China exported a total of 2739 tons of VB2 in 2017, equivalent to an average annual export price of US $32.38 per kilogram, which was lower than that in 2016, mainly due to lower export prices in the first half of the year. The company's products dominate China's VB2 export market, accounting for about 70% and 80% of the export share. At present, the price of VB2 in the domestic market is still at a high level of 440 yuan / kg. In January this year, the average monthly export unit price climbed to 49.3 US dollars / kg. As the world leader of VB2, the company enjoys the dividend of product price increase.
Profit forecast and valuation
We predict that the company's revenue from 2018 to 2020 will be 1.2800 million yuan, an increase of 71.6% over the same period last year, an increase of 6.9%, 1.4%, and a net profit of 4.93 million, 435 million, and an increase of 368.6%, 11.7%, 4.9% respectively. The current share price corresponds to the 2018 earnings forecast, the company's PE valuation is only 7-8 times, seriously undervalued, highly recommended, and given a "buy" rating for the first time.
Risk hint
VB2 price fluctuates greatly, market competition intensifies, and production accident risk.