Adama released its 2022 annual report: annual revenue was 37.382 billion yuan, YoY +20.44%, net profit of the mother was 609 million yuan, and YoY +287.17%. In dollar terms, the company's 2022 sales were 5.570 billion US dollars, an increase of 16% over the previous year (in US dollars), and the company's adjusted net profit was 118 million US dollars (the company's adjusted financial data excluded non-long-term, non-cash, or non-operating items that did not affect the company's daily operations), down 15% from the previous year (in US dollars).
Strong sales growth and price increases contributed to steady annual sales growth, reaching record highs. The company's sales in 2022 reached 5.57 billion US dollars, setting a new record for the same period in history. The year-on-year increase was 16% in US dollars (20% year-on-year in RMB terms, 19% year-on-year in fixed exchange rates). Against the backdrop of strong global demand for pesticide products in 2022, the company's 2022 product prices rose 16% year on year and sales volume increased 4% year on year, which led to annual sales growth. Higher costs have led to a decline in profit growth. Since the overall costs of raw materials, drug prices, logistics costs, etc. are still higher than before 2020, the company's gross margin in 2022 fell slightly by 1 percentage point to 28.1% (based on the company's adjusted amount), the company's 2022 USD-denominated EBITDA increased 10% year-on-year to US$740 million, and the company's adjusted net profit in 2022 fell 15% to US$118 million (adjusted performance excludes the impact of non-recurring and non-operating projects).
Looking at the subregions, sales growth rates in China, North America, and Latin America were high in 2022, with high agricultural product prices boosting strong pesticide demand. In terms of US dollars, sales in China increased sharply by 43% year on year in 2022, sales of branded formulation product lines in the region continued to grow, and the business acquired in 2021 also contributed a lot; sales in North America increased 12% year on year in 2022. The support of own production capacity and product line expansion contributed well to full-year sales growth; overall sales in Latin America increased 25% year on year in 2022, and product volume and prices in Brazil rose sharply. Additionally, sales in Europe increased 4% year over year in 2022, and sales in India, the Middle East, and Africa increased 3% year over year. In the future, we expect that the company will continue to develop corresponding products and sales strategies in response to regional differences to achieve the company's overall growth.
A differentiated product portfolio strategy helps continue to drive business growth. The company's differentiated products include not only products based on newly expired patents and active ingredients with high commercial potential, but also products with proprietary formulation technology, products containing more than one mechanism of action, and biopesticides. To continue to expand its differentiated product line, the company continued to register and launch a variety of new products around the world in 2022.
In 2022, the company launched 18 new differentiated products in different countries, and 10 differentiated new products were registered in different countries. We expect that by implementing the above product strategies, the company is expected to consolidate its differentiated competitive advantage and continue to drive business growth.
It is expected to benefit from collaboration within Syngenta Group. As a leading global generic pesticide company, the company is a unique member of Syngenta Group. We expect the company to benefit from the integration and collaboration of resources within Syngenta Group in the future.
Company profit forecast and investment rating: As a leading global generic pesticide company, the company's differentiated product portfolio boosts business growth and benefits from collaboration within the Syngenta Group. We expect the company to continue to grow in the future. Based on the company's 2022 annual report, we adjusted the company's 2023-2025 profit forecast accordingly. We forecast that the company's net profit from 2023 to 2025 will be $921, 1,236, and 1,594 billion yuan respectively. The corresponding EPS will be 0.40, 0.53, and 0.68 yuan respectively. The P/E values corresponding to the current stock price are 25, 19, and 15 times, respectively. Maintain a “Highly Recommended” rating.
Risk warning: Prices of agricultural products have declined sharply; registration of new products has fallen short of expectations.