Event: Baiao Chemical released its quarterly report for 2020. During the reporting period, the company realized revenue of 200 million yuan (year-on-year + 45.7%, month-on-month-26.1%) and net profit of 90 million yuan (year-on-year + 181.7%, month-on-month + 23.9%).
Comments: 2020Q1 achieved a gross profit of 126 million yuan (- 48 million yuan), four fees and taxes of 26 million yuan (- 52 million yuan), of which the management expense rate of 9.14% (- 8.59 pct), the company's excellent cost control ability, thus finally achieving a net profit of 90 million yuan (+ 17 million yuan). In terms of products, during the reporting period, the company's industrial fungicide products achieved revenue of 197 million yuan (year-on-year + 50.4%, month-on-month-24.2%), and F-nitrile intermediate products achieved revenue of 36 million yuan (year-on-year + 241.0%, month-on-month-32.3%). In terms of volume and price, during the reporting period, the sales of industrial fungicides were 7354.89 tons (+ 35.3% compared with the same period last year,-10.1% compared with the previous year), and the sales of F-nitrile intermediates were 505.25 tons (+ 50.3% compared with the same period last year, compared with-25.5%). We believe that the increase in year-on-year increase is mainly driven by the release of new production capacity, and the impact of the epidemic should be taken into account when the month-on-month ratio decreases. In terms of price, the average price of CIT/MIT series products during the reporting period was 13.54 yuan / kg (year-on-year + 10.2%, month-on-month + 2.8%), and the average price of F-nitrile intermediates was 70.58 yuan / kg (year-on-year + 127.38%, month-on-month-9.2%), all of which performed well compared with the same period last year and resonated with sales volume. At the same time, the company has also established a stable long-term cooperative relationship with well-known enterprises such as Dow Chemical, Lonza in the United States and Langsheng in Germany to provide support for the company's performance.
The project has been put into production one after another, and the pace of capacity layout is robust: the company's pine island branch industrial fungicide phase II project (that is, annual production of 12000 tons of CIT/MIT or 2000 tons of MIT, 400 tons of OIT, 2500 tons of BIT) and 7000 tons of F-nitrile intermediate expansion project were put into production in 2019, the company has also become the largest industrial fungicide manufacturer of isothiazolinone in Asia, with an annual production capacity of more than 30,000 tons. In March 2020, the company announced that it intends to invest in the third phase of the industrial fungicide project of Pine Mudao Branch, including CIT/MIT production capacity of 12000 tons / year (or MIT 2000 tons / year), OIT production capacity of 1200 tons / year (or DCOIT 1200 tons / year), BIT of 2500 tons / year, construction period of two years, which will effectively help the company's total production capacity of industrial fungicides exceed 40,000 tons, so as to further enhance the company's competitiveness and profitability. Consolidate the leading position of subdivided industries.
Investment suggestion: we expect the company's net profit from 2020 to 2022 to be 392 million yuan, 438 million yuan and 493 million yuan respectively. Maintain the buy-An investment rating.
Risk hint: project construction is not as expected; product price is under pressure; macro environment is not as expected