The company released its three-quarter report for 2023. In the first three quarters of 2023, the company achieved operating income of 3.707 billion yuan, a year-on-year decrease of 2.51%, and net profit to mother of 442 million yuan, an increase of 2.70% year-on-year, after deducting net profit of 476 million yuan, a year-on-year decrease of 1.42%. Among them, revenue for the third quarter was 1,044 billion yuan, up 5.25% year on year, net profit to mother was 111 million yuan, up 9.96% year on year, and net profit after deducting non-return to mother was 98 million yuan, down 39.71% year on year.
Pesticide prices continue to fall, and the resilience of the company's performance is prominent. Pesticide prices remained weak overall in the third quarter. According to Zhongnong Lihua, the three-quarter average prices of imidacloprid, imidacloprid, thiamethoxam, and butyl etherurea were 9.02 (YoY -35.94%, QoQ -2.98%), 8.17 (YoY -45.84%, QoQ -1.85%), 52.58 (YoY -35.94%, QoQ -0.44%), 8.25 (YoY -35.75%, QoQ -6.6.12%), and 6.43 (YoY -47.75%, QoQ-2.34 %), 11.08 (YoY -21.48%, QoQ -7.51%) 10,000 yuan/ton; the three-quarter average prices of dextromethoxazole, pyrazole, and proconazole in the biocides were 11.14 (YoY -37.02%, QoQ -12.35%), 18.25 (YoY -28.36%, QoQ -14.49%), 10.58 (YoY -43.46%, QoQ -17.96%), respectively. Against the backdrop of the continued decline in the prices of the company's major pesticides, the company's gross profit margin for the third quarter was 29.96%, which remained flat from month to month, reflecting strong business resilience.
Production capacity implementation helps future growth and deepens local cooperation with Bayer Crops. Shandong Hailier, a wholly-owned subsidiary of the company, is progressing in an orderly manner. If fully put into operation, the design capacity will reach 5,000 tons. The increase in the share of prothioconazole will help improve the company's product structure and increase the company's profit level. Furthermore, according to the company's public account, on October 18, Haillier and Bayer Crops signed an agreement to promote complementary resources at home and abroad, and carry out in-depth cooperation in the fields of original drug cooperation, innovative compound development, joint product registration, pesticide formulation development, product contract production, and exclusive formulation agency. Looking forward to the future, the company will focus on implementing two-wheel drive, adhere to the integrated development of original drugs and formulations, simultaneous domestic and foreign layout, continuously expand product dimensions, strengthen business channels, and continuously enhance overall competitiveness. The company's future performance is expected to further improve.
Maintain profit forecasts and maintain an “gain” rating. The company's revenue for 2023-2025 is estimated to be $57.52, 72.36, and 8.102 billion yuan, respectively, and net profit to mother will be 5.57, 6.83, and 855 million yuan, respectively. The corresponding PE is 11X/9X/7X, respectively, maintaining the “increase in holdings” rating.
Risk warning: the price of glyphosate has declined, and the commissioning progress of the project falls short of expectations