23H1 revenue increased by 8.94% year-on-year, non-return net profit increased by 24.67% year-on-year, and profitability rebounded. In the first half of 2023, the company achieved a total operating income of 954 million yuan, an increase of 8.94% over the same period last year, and a net profit of 169 million yuan, an increase of 20.11% over the same period last year, deducting 163 million yuan of non-return net profit, an increase of 24.67% over the same period last year.
In the first half of 2023, the company's gross profit margin and net profit margin increased compared with the same period in 2022. The expansion of product profit margin was mainly affected by the fluctuation of upstream raw material prices. In addition, the increase in product sales also had a positive impact on performance growth.
Growth slowed in the second quarter. In the second quarter of 2023, the company achieved operating income of 619 million yuan, down 2.82% from the same period last year, and its net profit was 114 million yuan, up 14.65% from the same period last year, deducting 109 million yuan from non-parent net profit, an increase of 10.92% over the same period last year. In the second quarter of 2023, the company's gross profit margin was 42.49%, 1.3% higher than the same period last year, 3.1% higher than the previous month, 19.79% net profit, 3% higher than the same period last year, and 2.2% higher than the previous year.
Multi-brand operation, garden business to achieve growth. At present, the company implements multi-brand operation, with five product production bases of Jianyang in Sichuan, Yongchuan in Chongqing, Jiangxian in Shanxi, Hebi in Henan and Anyang in Henan. Guoguang agricultural materials, Guoguang garden, Yir Shuangfeng, Haozhida, Yier Quanfeng five major marketing business plates. Multi-brand operation is beneficial for each brand to cover blank crops and blank market on different application crops, increase market share and enhance the competitiveness of the company. In the first half of 23, Guoguang Gardens achieved an operating income of 167 million yuan, an increase of 12.8 percent over the same period last year, and a net profit of 35.85 million yuan, an increase of 58.9 percent over the same period last year.
The scale of plant growth regulator industry has increased. According to the statistics of the China Pesticide Industry Association quoted in the company's 23 semi-annual report, by the end of December 2022, there were 451 plant growth regulator production enterprises in China, and 1434 plant growth regulator products were effectively registered, an increase of 3.91% over the same period last year. Accounting for 3.19% of the registered number of pesticide products, the registered object involves 141 kinds of crops, mainly used to regulate growth, increase production, defoliation and so on.
Plant growth regulators have the advantages of low cost, high efficiency and environmental friendliness. In recent years, with the continuous development of agriculture in China, the market demand for plant growth regulators is increasing year by year. The market scale of China's plant growth regulator industry increased from 5.81 billion yuan in 2016 to 9.61 billion yuan in 2021, with an annual compound growth rate of about 10.6 percent, which is higher than the growth rate of the pesticide industry.
Profit forecast. We estimate that the net profit of the company from 2023 to 2025 is 2.57,3.10 and 364 million yuan respectively, and the corresponding EPS is 0.59,0.71 and 0.84 yuan respectively. With reference to the valuation of comparable companies in the same industry, it is given a 23-year 20-25 times PE, corresponding to a reasonable value range of 11.8-14.75 yuan, maintaining a rating better than that of the big city.
Risk hint. The price of the product fluctuates and the downstream demand is lower than expected.