Event
On October 21, 2019, the company released three quarterly reports that the company achieved revenue of 845 million yuan in the first three quarters, an increase of 31.42% over the same period last year, and a net profit of 122 million yuan, an increase of 281.36% over the same period last year.
Analysis.
In the third quarter, the pharmaceutical sector maintained rapid growth, and Jiuling Pharmaceutical subsidiary achieved good development. In the third quarter, the company achieved an operating income of 291 million yuan, an increase of 46% over the same period last year, and a net profit of 44.798 million yuan, an increase of 191% over the same period last year. In the third quarter, the company's pharmaceutical sector business achieved rapid growth, and the overall pharmaceutical business revenue increased by 39% month-on-month. In the first half of the year, the company's Jiuling Pharmaceutical subsidiary has many years of customized pharmaceutical intermediates business foundation and a good basis for downstream customer cooperation. After the March 21 accident, the environmental protection and safety review of the chemical industry in East China is extremely strict, and more intermediate production enterprises are greatly affected. the company relies on years of industry accumulation and good geographical advantages, relying on the continuous release of new production capacity, to undertake more downstream customer orders, achieving rapid growth in performance. With the continuous strengthening of the trend of undertaking outsourced production of intermediates in China, the pharmaceutical sector of the company is expected to achieve sustained growth.
Food additives maintain a good profit level, and cooperation with Nestle is expected to promote the sustainable development of the company. Since 2018, the company has been operating and producing seasoning products for many years, the industry pattern of Iambig has continued to improve, small-scale production capacity withdrew from the industry competition, the steady growth of downstream demand gradually digested excess capacity, product prices continued to rise under the pattern of oligopoly competition, to 2019 Iambig product prices remained at a high level, providing the company with a good profit space. Since 2014, the company has conducted pilot cooperation with Nestl é on special products, and signed a strategic cooperation agreement in 2016. With more than 5 years of product cooperation layout, the products cooperated with Nestl é will gradually enter the product release period. with the company's many years of fermentation production experience and Nestle downstream good channel sales capacity, the two sides of the product cooperation is expected to quickly market volume, is expected to provide the company with sustainable development power.
Investment suggestion
The pharmaceutical sector of the company benefits from the optimization of the industry pattern and the release of production capacity, and continues to achieve rapid growth. ITung products maintain a high level of profitability, and the special products in cooperation with Nestl é are expected to drive the company's long-term growth. Considering that it still takes time for the release of food additives, the company's profit forecast is reduced by 30%. The company forecasts EPS 0.24,0.36,0.39 yuan from 2019 to 2021, and maintains the "buy" rating.
Risk hint
The risk of large fluctuation in the price of seasoning products; the production progress of the new production capacity of subsidiaries is not up to expectation; the application of corn fermentation is not up to the expected risk.