Performance continues to grow, with short-term surprises having an impact. The company achieved revenue of 3.803 billion yuan in the first three quarters of 2022, +47.2% year on year; net profit of the mother was 431 million yuan, +38.41% year on year. Among them, quarterly revenue for the third quarter was 992 million yuan, or -38.41% of the previous quarter; Guimu's net profit was 101 million yuan, -45.7% month on month. According to the company's announcement, a safety accident occurred in Shandong Hailier, a wholly-owned subsidiary, in the third quarter, and the equipment was completely shut down for safety inspections, which had an impact on the production and sale of original drugs in the short term.
The volume and price of pesticide products rose sharply in the first three quarters. The company's pesticide products sold 39,692.43 tons in the first three quarters, +16% year on year; unit sales price reached 94,196.98 yuan/ton, +28% year on year. Among the company's main pharmaceutical products, the price of imidacloprin/acetamidine has continued to fall since Q4 in '21. Currently, the price has remained at 15/140,000 yuan/ton, but there is a slight increase compared to the same period last year; the price of prothiobaclozole has continued to decline, and currently the price remains at 480,000 yuan/ton; the price of pyrazole has continued to rise since Q2, and the current price remains at 300,000 yuan/ton.
The Hengning project drives continuous growth in performance, and the extension of the industrial chain enhances competitiveness. In June 2022, the first phase of the Qingdao Hengning project began trial production of the insecticide butyl ether urea, the original drug bromeconitrile, the original drug for the bioconitrile, and the original drug for proconazole, and the original drug for proconazole, and the second phase of the Qingdao Hengning project entered the construction phase. The company acquired 26% of Shaanxi Jin Xinyi's shares in cash, enhancing the company's overall ability to control the supply and quality of upstream raw materials, deepening the company's intermediate-drug strategic layout, which is conducive to enhancing the company's overall competitiveness.
Risk warning: pesticide product prices are falling; pesticide product sales are falling short of expectations; progress in releasing new production capacity falls short of expectations.
Investment advice: Lower the profit forecast and maintain the “buy” rating.
Due to uncertainty about the resumption of production by the subsidiary Shandong Hailier, we lowered our profit forecast. The net profit returned to the mother in 2022-2024 is estimated to be 579/832/1,026 million yuan (the original value in '22 was 643 million), diluted EPS = 1.70/2.44/3.01 yuan, and the corresponding PE was 14x/10x/8x, maintaining the “buy” rating.