Event
On August 19, 2019, the company released its semi-annual report for 2019, with operating income of 554 million yuan in the first half of the year, an increase of 24.87% over the same period last year, and a net profit of 77.106 million yuan, an increase of 365.73% over the same period last year.
Analysis.
The acquisition of customized pharmaceutical intermediate company Jiuling Pharmaceutical has led to the rapid growth of the company's performance. Jiuling Pharmaceutical has been engaged in customized intermediate business (CMO business) for many years, providing downstream customers with pharmaceutical intermediates such as AIDS, hepatitis C, diabetes and so on. In February 2019, Jiuling Pharmaceutical was officially consolidated, with a net profit of 31.7154 million yuan in the first half of the year, accounting for 41.13% of the company's net profit in the first half, supporting the rapid growth of the company's performance. Benefiting from the continuous production transfer of the global intermediate industry and the stringent domestic safety and environmental protection requirements, it is difficult for small-scale fine chemical enterprises to ensure a stable supply, and Jiuling Pharmaceutical is expected to undertake more downstream orders and deepen cooperation with downstream customizers. At the same time, in the second half of 2019, Jiuling Pharmaceutical will continue to release new production capacity, providing sufficient development space for performance growth of customized intermediates.
The prosperity of Ishig industry continues, and the price of products remains high. After years of industrial trough, backward production capacity gradually withdrew, environmental protection requirements became stricter, small-scale backward production capacity withdrew from the industry competition, while the steadily growing downstream demand digested excess capacity, the supply and demand pattern of Ishig industry was greatly improved, and it was in an oligopoly competition pattern for a long time. In the first half of 2019, IambiG prices remained high, enterprises in the overlay industry cooperated well, and it is expected that Ihumg products will remain high in the second half of the year.
"one-end productive" industrial chain layout, flexible adjustment of product production. The company uses corn starch as the raw material for the downstream layout of many kinds of amino acids and nucleotides and other products. in the second quarter, due to the downward prices of products such as fructose syrup and feed amino acids, the company stopped the sale of feed amino acids and greatly reduced the production of fructose syrup. By adjusting the downstream product structure, to minimize the impact of price fluctuations on profits.
Investment suggestion
In the second half of the year, Jiuling Pharmaceutical subsidiary will still have slow release of new capacity, the increase in output will drive profit growth, the industry pattern of iTung will continue to improve, product prices are expected to rise further, and corporate profits are expected to grow further in the second half of the year. It is forecast that the company's net profit in 2019-2021 will be 248 million, 310 million, 335 million yuan respectively, corresponding to EPS 0.34 yuan, 0.42 yuan, 0.45 yuan, to maintain the "buy" rating.
Risk hint
The risk of significant fluctuation in the price of seasoning products; the production progress of the new production capacity of subsidiaries is not as expected; the application of corn fermentation is not up to the expected risk.