Brief performance review
On March 29, the company released its 2022 annual report. The company achieved revenue of 2.97 billion yuan in 2022, +35.4% year on year, and achieved net profit of 4.2 billion yuan, +96.63% year on year. Among them, the company achieved net profit of 121 million yuan to Guimu in the fourth quarter, and the performance was in line with expectations.
Management analysis
The company's product prices are at historically low levels, and there is little downside risk. Judging from the product price, the main herbicide product, the original drug chlorofluoropyroxyacetate, is currently priced at 152,000 yuan/ton, at a historical quartile of 33.55% (starting in 2018); the current price of the original drug cyanofluoride is 155,000 yuan/ton, at a historical quartile of 9.52% (beginning of 2018); the current price of the original drug chlorofluoropyroxide is 160,000 yuan/ton, at the historical quartile of 46.15% (beginning of 2018); the current price of the original drug chlorofluorobenzoate is 160,000 yuan/ton, at a historical quartile of 46.15% (beginning of 2018) insecticides The main product, thiamethoxam, is currently priced at 107,000 yuan/ton, which is the lowest price in history (starting in 2018); the current price of the drug lice aconide is 205,000 yuan/ton, which is the lowest price in history (starting in 2018). On a quarterly basis, the average price of the company's mainstream products declined in the first quarter of 2023 compared to the fourth quarter of 2022.
There are plenty of projects currently under construction to support the company's future growth. The company currently has fixed assets of 1,458 million yuan and is under construction of 505 million yuan. Looking at each project, Ning Yitai has 2 projects undergoing trial production, Guorui Chemical has 1 project undergoing trial production, and the headquarters has 2 projects undergoing trial production. We believe that the continuous commissioning and implementation of the above projects will help the company further expand production capacity and enhance profitability.
Profit Forecasts, Valuations, and Ratings
Prices of the company's main products fell, but the new capacity expansion brought about an increase in volume. We revised the company's net profit of 2023-2024 to 492 million yuan (-4.8%) and 615 million yuan (-5.7%) respectively, and introduced the 2025 net profit forecast of 797 million yuan; EPS was 1.59 yuan, 1.98 yuan and 2.57 yuan respectively, and the corresponding PE was 11.35X/9007X/7.01X respectively, maintaining the purchase rating.
Risk warning
Global demand for pesticides declined; pesticide product prices fell; production capacity construction and deployment progress fell short of expectations; safety and environmental inspections affected the normal commencement of construction