Main points of investment:
The company announced its 2018 results forecast, which was lower than expected. It is expected to achieve a net profit of 572.3995 million yuan to 787.0493 million yuan in 2018, a year-on-year change of between-20% and 10%, lower than expected. Among them, the net profit loss of Q4 in the single quarter was between 167murf and 382 million yuan, compared with a loss of 192 million yuan in the same period last year. The main reasons are three points: 1. The gross margin of compound fertilizer declined due to the continuous high price of raw material fertilizer, and the sluggish demand led to a decline in the sales of compound fertilizer and controlled-release fertilizer products. The increase in cost caused by the promotion of the new product "pro-soil No. 1"; 3. Germany's Kim Jong-da is officially included in the consolidated statement, with an 18-year net profit of about-50 million yuan.
The low price of agricultural products has led to a decline in demand for compound fertilizer, and the rising prices of raw materials have dragged down the gross profit margin of compound fertilizer. According to Longzhong Petrochemical statistics, in 2018, the market prices of urea in Shandong, 55% of monoammonium phosphate powder in Hubei and 60% of potassium chloride powder in salt lakes rose 20%, 16% and 17% respectively compared with the same period last year, while the 45% chlorine group of compound fertilizer rose only 11% year-on-year. Gross profit margin fell year-on-year. At the same time, the low price of agricultural products led to a decline in sales of compound fertilizer and controlled-release fertilizer products compared with the same period last year.
The smooth merger of Kim Jong-il in Germany is expected to bring new profit increments in the future. The company completed the acquisition of the stake in Kim Jong Da in Germany on August 1, 2018 and included it in the consolidated statement. From January to July, the company holds 34.74% of the equity of German Jinzhengda, and its profit is about 50 million yuan in the net profit of returning to the mother; after completing the acquisition in August-December, the proportion of holding the equity of German Jinzhengda is 94%, and its profit is included in the net profit of about-100 million yuan, which affects the net profit of returning to the mother for the whole year of 18 years-50 million yuan. Germany Jinzheng is greatly affected by the horticulture industry, making a profit in the first half of the peak season and a loss in the second half of the year. The full fiscal year and post-balance sheet is expected to bring new profit increments for the company in the future.
Vigorously promote the new product "pro-soil No. 1" and open a new era of pro-soil planting. Aiming at cash crops and opening up the blue sea market for soil improvement, the company has accelerated the market expansion of "pro-soil No. 1" over the past 18 years, making its series of products stand out in the greenhouse planting area, but the promotion cost has increased correspondingly. Only 4Q is expected to add up to 200 million in a single quarter.
The "Jinfeng Commune" model has been promoted smoothly. Jinfeng Commune integrates upstream, middle and downstream resources to provide farmers with a full range of planting services, including soil remediation, whole-process crop nutrition solutions, brand building, production and marketing docking, agricultural finance and other all-round agricultural services. create a new planting business model, cut into the trillion agricultural service blue ocean market, while extending to the back-end agricultural service to drive the growth of compound fertilizer product sales. At present, it is estimated that about 170Jinfeng communes have been signed, with more than 120. it is estimated that the target for 19-20 years is 300,500 respectively, and the area of arable land served is expected to exceed 10 million mu.
Profit forecast and investment rating: due to the decline in the gross profit margin of compound fertilizer caused by the sharp increase in the price of raw materials and the increase in the expenses of popularizing "pro-soil No. 1", we have reduced the company's 2018-2020 net profit. It is estimated that the net profit for 2018-2020 will be 6.09,6.69,7.72 (originally 8.48,9.81,1.250 million yuan) respectively. The corresponding EPS is 0.19,0.20,0.23 yuan per share (originally 0.26,0.30,0.38 yuan per share), and the current market capitalization corresponds to 36,34,30 times of PE.