Core viewpoints
High inventory and high interest rates make the industry face short-term challenges, the company has maintained a sound operation, the layout of production capacity at home and abroad has been steadily advanced, and the selective purchasing strategy has been adopted to gradually digest inventory, with an operating income of 17.253 billion yuan in the first half of the year. The company continues to strengthen differentiated product research and development, adhere to the preparation winning strategy, and launch a number of new products sought after by the market. In the future, with the beginning of the planting season in some areas, the global inventory will be gradually digested, and the industry demand is expected to improve. At the same time, with the expiration of some patented products and the continuous growth of the company's R & D capacity, the company's business performance is expected to continue to improve.
Event
The company issues its 2023 half-yearly report
The company released its half-yearly report on August 30, 2023, with operating income of 17.253 billion yuan, down 8.21% from the same period last year; net profit from home was-242 million yuan, down 133.08% from the same period last year; net profit from non-return was-305 million yuan, down 146.56% from the same period last year; gross profit margin was 22.57%, down 3.89pct from the same period last year. Of this total, the operating income in the second quarter was 8.643 billion yuan, down 11.63% from the same period last year, up 0.37% from the previous year; the net profit from the home was-325 million yuan, down 206.89% from the same period last year and 490.80% from the previous year; deducting the non-home net profit from the previous year was-346 million yuan, down 243.35% from the same period last year and 935.42% from the previous year; and the gross profit margin was 20.56%, down 6.42pct from the same period last year and 4.03pct from the previous year.
Brief comment
High inventory leads to short-term pressure on performance, and downstream demand is expected to improve the supply and logistics situation in the first half of the year. High inventory in channels and high interest rates overseas make downstream customers hold a wait-and-see mentality in purchasing plant protection products, and destocking has become the mainstream trend of the market. at the same time, the overall decline in crude drug prices in the world market has led to a general cautious attitude in the market and affected the company's sales performance. The company maintains a steady operation under unfavorable circumstances and achieves a business income of 17.253 billion yuan. In terms of business, sales of fungicides increased by 8.9% year-on-year, while sales of herbicides and pesticides decreased by 13.6% and 1.5% respectively. In the future, with the continuous progress of the process of destocking and the gradual improvement of market demand, the company's profit space is expected to be improved.
Global leader in the field of crop protection, continue to strengthen differentiated product layout as a global leader in crop protection, Andormai Group has more than 60 subsidiaries, covering more than 100 countries and regions. Mainly engaged in the development, production and sales of non-patented crop protection products. The company continues to register and launch a variety of new products in various markets around the world, promoting the preparation winning strategy, and the company's new product introduction rate (new products launched in the past five years accounted for 22% of annual sales in 2022). By the end of June 2023, the original value of intangible assets corresponding to the company's proprietary technology and product registration increased from 12.204 billion yuan at the end of 2022 to 12.982 billion yuan, an increase of 6.37%. The company uses proprietary preparation technology platform Sesgama? On this basis, Fullscript?, a herbicide with dual action mechanism, was launched in cooperation with Rice Tech in the United States. At the same time, the natural copper-based fungicide Mastercop ACT? Registered in Poland. With the help of the proprietary low-dose preparation technology developed by Andormai, the product minimizes the environmental impact of pesticide application, which is in line with the current trend of reducing pesticide application. In the future, the company will continue to adhere to the preparation winning strategy, strengthen the introduction of new products in the next few years on the basis of Andaomai preparation technology platform, consolidate the leading advantage of non-patented crude drugs, and select more than 20 active ingredients that are about to expire in the short term to carry out research and development.
Orderly distribution at home and abroad, casting the company's global competitiveness
The company distributes three major production bases in China. Jingzhou base in 2023 to complete the upgrading and relocation work, capacity to achieve high-load operation. Jiangsu Anbang base is still in the process of upgrading and relocation, which is expected to be completed by the end of the year. As of June 2023, all projects currently under construction in Huifeng production base have been approved by environmental impact assessment, and production capacity will be released one after another in the future. In terms of overseas layout, Q1 acquired New Zealand AgriNova in 2023 to enrich the product matrix of the New Zealand market and as a strong complement to existing business, preparing the company to enter the biological plant protection, plant nutrition and plant growth regulator markets. In the future, with the continuous improvement of the company's layout at home and abroad, it will continue to enhance the competitiveness of the company's production capacity and cast the company's long-term value.
Profit forecast and valuation: considering that with the decline of high overseas inventories and the stabilization of crude drug prices in the second half of the year, the company's profitability is expected to be repaired in the second half of the year, profitability is expected to improve, and performance is turned into profit, so the company's net profit for 2023, 2024 and 2025 is 309 million yuan, 634 million yuan and 988 million yuan respectively, corresponding to 0.13,0.27,0.42 yuan respectively. The corresponding PE were 58.4X, 28.5X and 18.3X, respectively. According to estimates, the compound growth rate of the company's homing net profit from 2023 to 2025 is 78.79%, and the company's PEG index is less than 1. The company still has a good investment value and maintains a "buy" rating.
Risk hints: 1. Geopolitical risks. Under the background of the COVID-19 epidemic and the conflict between Russia and Ukraine since 2020, there is a large geopolitical risk in the world, and the global market demand is uncertain in the future. 2. Market competition aggravates the risk. With the long-term high crop prices and the further expansion of global agrochemical suppliers, there may be a risk of oversupply in the future. 3, the risk of unstable production, agrochemical products as chemical products, most of the raw materials used by the company are flammable, explosive or toxic substances, and the production process involves high-temperature and high-pressure processes, facing safety and environmental risks; 4, downstream demand is lower than expected, global demand for agrochemical products has remained high in recent years, crop prices may decline in the future, and industry demand may be lower than expected.