The company released its three-quarter report in 2019, with a cumulative income of 1.542 billion yuan in the first three quarters, an increase of 46.48% over the same period last year, and a net profit of 78 million yuan, an increase of 588% over the same period last year. Among them, the operating income in the third quarter was 550 million yuan, an increase of 30.62% over the same period last year; the net profit was 55 million yuan, and the non-net profit was 72 million yuan, an increase of 102.3% over the same period last year; and the performance was in line with our expectations.
Both volume and price rise, income increases rapidly
The substantial increase in the company's revenue is mainly due to the rise in the volume prices of the core varieties carbofuran, sulfuryl and methomyl: in the first three quarters, the company's sales volume of 2644 tons increased by 45.7% over the same period last year, with a unit price of 9.97 million yuan per ton, an increase of 21.13%. The sales volume of 1834 tons increased by 6.2% over the same period last year, with a unit price of 866 million yuan per ton, an increase of 38.09% over the same period last year. The sales volume of sulfur Shuangwei is 1154 tons, and the unit price is 1594,000 yuan per ton, an increase of 17.88% over the same period last year. Other varieties have also increased their prices to varying degrees. We believe that the stricter environmental protection policy has led to the suspension of production of domestic small and medium-sized enterprises related to carbofuran and the improvement of the company's market share and bargaining power, so the sales volume and price of the company's core pesticide products have shown a steady upward trend in recent years.
Profitability continues to improve. The gross profit margin of 28.79% in the third quarter was close to the best level in history, up 6.16PCT from a year earlier. The property management of the company's separated employee family area in the third quarter reduced the current net profit by 16.9 million yuan. Even taking into account the loss, the company's quarterly net interest rate was 10.96%, the profitability still reached a record high, up 11.15 1.84PCT compared with the same period last year. During the first three quarters, expenses remained stable, R & D expenses increased by 50%, and the expenditure rate during the period was 12.47%, which decreased 0.57PCT compared with the same period last year. The operation remained stable, and the turnover of inventory and accounts receivable increased slightly. In the first three quarters, there was a net inflow of operating cash of 96 million yuan, and the asset-liability ratio dropped slightly to 47.4%.
Production capacity has been put into production, and the company has entered a period of rapid growth.
The company gave full play to the advantages of Hunan Chemical Research Institute's technology platform, applied for 4 invention patents and granted 5 new invention patents in the first half of the year. The construction of the parathion new area of Guixi Company is accelerating. Recently, the company announced that it will invest 100 million yuan to set up Ningxia Haili subsidiary to firmly develop pesticides and other fine chemicals. As new projects are put into production, the company is expected to maintain steady growth in the future.
Profit forecast and valuation: the fixed increase project has been put into production one after another, and we think the company will enter a period of rapid growth. The EPS forecast of the maintenance company from 2019 to 2021 is 0.32, 0.70, 0.83 yuan, respectively. The current price corresponds to 2019 PE23.15 times, PB2.41 times. The company is the leader in carbamate insecticides in the world, and the supply shrinks, the volume and price of core products rise, and the performance is flexible; the reform of state-owned enterprises reduces staff and increases efficiency, and operational efficiency continues to improve; fixed-increase projects are put into production one after another, and future performance is expected to accelerate growth. Maintain the buy rating.
Risk tips: product substitution risk; production safety risk; raw material supply risk
