The performance is better than expected
The company released its quarterly report for the first quarter of 2020, with revenue of 440 million yuan, down 9.24% from the same period last year, and net profit of 61.9865 million yuan, up 102.34% from the same period last year. The performance is better than we expected.
The price of the product has gone up generally, and the main increase in the contribution of thiosulfan
The company's product prices rose generally in the first quarter, with an average price of 100,000 yuan per ton for carbofuran, 1684 million yuan per ton for sulfuran, and 9.88 million yuan per ton for carbosulfan, up 2.78%, 20.97% and 0.3% respectively over the same period last year.
Among them, the sales volume of thiosemarb in the first quarter was 396 tons, an increase of 58.6% over the same period last year, which is expected to be the main increment of the company's performance growth in the first quarter. Sales of carbofuran and pyrimidinol have declined in varying degrees, which is expected to be related to the logistics disruption caused by the epidemic and is expected to be alleviated in the second quarter.
The price has gone up, the proportion of sulphide has increased, and the company's 1Q gross profit margin has increased by 30.22%, up 6.72PCT from the same period last year, and the net profit rate has increased by 15.06% compared with the same period last year. 8PCT, the profitability of the company is at an all-time high. The company strengthened its cost control, and the three expenses decreased significantly compared with the same period last year. During the period, the expense rate was 11.25%, which decreased 2.1PCT compared with the same period last year. Only the R & D cost increased by 33% to 11.16 million yuan.
Pesticide demand is expected to recover
The growth rate of global pesticide demand is expected to pick up slightly. According to the big four multinationals' outlook for their agrochemical business in 2020, revenue growth is expected to be + YOY 4% 6%, all slightly higher than in 2019. In the domestic market, there is pressure on pest control this year, and the demand for pesticides and fungicides is expected to increase slightly. The market is worried about the resumption of production of pesticide enterprises in northern Jiangsu, which is expected to have no impact on prices due to the company's high share in subdivision areas. The fall in oil prices has led to a reduction in raw material costs, and the company's profitability is expected to rise steadily.
Ningxia and Guixi bases start construction, and the future growth is worth looking forward to.
The construction of Guixi parathion new area with an investment of 484 million yuan has been started, and Ningxia Haili, with an investment of 100 million yuan, has also launched an environmental assessment, and the project of heterocyclic pesticides and intermediates has been progressing steadily. The company relies on the research and development capability of Hunan Chemical Research Institute, 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: in the future, new projects will be put into production one after another, and we think the company will enter a period of rapid growth. From 2020 to 2022, the EPS forecast of the maintenance company is 0.70, 0.83 and 1.03 yuan, respectively. The current price corresponds to PE9.1 times and PB1.94 times in 2020. The company is the leader in carbamate pesticides in the world, with shrinking supply, rising volume and price of core products and great performance flexibility; state-owned enterprise reform, staff reduction and efficiency improvement; new projects have been 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
