Event: the company released its performance KuaiBao. In 2019, the company achieved operating income of 1.782 billion yuan, an increase of 9.42% over the same period last year. The net profit belonging to shareholders of listed companies was 183 million yuan, up 12.05% from the same period last year.
Steady growth in overseas markets led to a rebound in overall performance
In terms of a single quarter, the company achieved revenue of 530 million in the fourth quarter, an increase of about 3% year-on-year, and a net profit of 40 million, up 14% from a year earlier. In 2019, the downstream pig farming industry was seriously affected by the non-plague epidemic, and the pig stock fell to an all-time low, affecting the demand for the company's products, resulting in a year-on-year decline in domestic revenue from chlortetracycline and animal vaccines. However, after the limited resistance policy in the American market, the company realized the growth of chlortetracycline products in the American market by timely adjusting the product structure and changing the marketing model, coupled with the continuous development of environmental protection and other business, after taking into account the impairment of goodwill, the company's overall performance still achieved growth.
The demand for chlortetracycline is expected to pick up, and the company ushered in a rise in both quantity and price.
Chlortetracycline is the most commonly used veterinary antibiotic because of its low price and good effect. As downstream users have low demand elasticity and low price sensitivity to chlortetracycline, enterprises can transfer part of the cost pressure downstream by raising prices to ensure their own profit margins. The price of the company's domestic chlortetracycline products has increased by 10% since February this year. Taking into account the changes in use and referring to the average head usage in the United States, we estimate that the potential consumption of chlortetracycline in China is about 150000 tons, while the domestic sales in 2018 is about 40,000 tons, with huge potential space. In the future, with the continuous replenishment of large-scale factories and the improvement of breeding concentration, the demand for the use of chlortetracycline is expected to further open, while the tight supply side makes chlortetracycline have room for continuous price increase.
Animal vaccines have been laid out for many years and are expected to turn losses into profits.
In recent years, the company has quickly entered the veterinary vaccine industry through the merger and acquisition of Hangzhou Youben and Ptek of the United States, and has become a rising star in the industry. Relying on two vaccine business platforms at home and abroad, and making full use of the vaccine of the international advanced technology development company, the company has formed a strong technical research and development capability and product document number resources.
The company actively increases the scientific research investment and technological innovation of the vaccine business, and cooperates with a number of scientific research institutes and colleges to transform the production process and improve the product quality of the company. With the continuous increase of the company's investment in veterinary vaccine research, the listing of new vaccines in the future will add new business growth points for the company. The company's vaccine business is expected to bottom out as the epidemic stabilizes and downstream replenishment continues to pick up.
Profit forecast and investment suggestion
We slightly adjust the company's performance and estimate that the annual net profit for 19-20-21 is RMB 183, 375 million (the previous value is RMB 1.74), compared with 12.05%, 52.51, 34.07, and 0.29, respectively. We believe that the demand of the chlortetracycline industry is rigid, the competition pattern is good, and the company has a solid leading position and pricing power; at the same time, the company actively promotes the development of business in the field of vaccine and environmental protection, and continues to enhance its competitiveness. performance is expected to achieve steady growth. Based on this, it will be given 30 times PE for 20 years, with a target price of 13.2yuan, maintaining a "buy" rating.
Risk hints: the risk of policy change; the risk of epidemic; the risk that new product expansion is not as expected.