Event: the company released its three-quarter report in 2019. During the reporting period, the company achieved operating income of 500 million yuan, an increase of 0.42% over the same period last year, and a net profit of 69 million yuan, an increase of 5.79% over the same period last year. Of this total, the operating income in the third quarter was 160 million yuan, down 21.79% from the same period last year, and the net profit returned to the mother was 20 million yuan, an increase of 5.48% over the same period last year.
The main business from chemical fertilizer auxiliaries to digital agriculture is progressing smoothly and profitability continues to improve!
According to the company's 19Q3 performance forecast, the company's net profit during the reporting period maintained growth compared with the same period last year, mainly for two reasons: first, due to the strengthening of domestic key customer marketing efforts, actively develop and promote new products; second, to strengthen the business integration of the holding subsidiary of Holland Norvik and France PST, synergy and scale effect gradually appeared. We believe that since the company has gradually transferred the business related to fertilizer auxiliaries to Fubon New Materials, a wholly-owned subsidiary, since the second half of 2019, the core of the company's main business has moved to digital agriculture, therefore, the new products referred to in the announcement may mainly refer to new products related to digital agriculture, including but not limited to intelligent fertilizer services and products, new fertilizers and so on. Combined with the background of the company gradually stepping into the commercial landing stage in the layout of digital agriculture in China, it can be seen that the transformation of the company's main business from chemical fertilizer auxiliaries to digital agriculture is progressing smoothly.
In the second half of 19 years, the company's digital agriculture project has been widely landed in China, and the future performance is expected!
Since the second half of 2019, the company has continued to improve the business capabilities related to digital agriculture from multiple dimensions of technology, service, channel and promotion: in July, the company introduced Saturas stem water potential sensor, intelligent drip irrigation and digital agriculture to Shandong Yantai apple orchard and Hubei Hanchuan vineyard base; in August, the company obtained fruit yield estimation "cool techs" through equity participation in Israel Fruitspec. In the same month, the company established the first government agriculture with the supply and marketing cooperative of Yantai City, with a view to centering on the medium-and long-term strategic planning of digital agriculture and promoting the rapid landing of the planting comprehensive service plan with the soil as the entrance. In September, the yield measurement and observation meeting organized by the company was held in Linli County, Hunan Province. The acceptance results of 150 mu of medium rice fields in this county showed that the Fubon soil testing and fertilizer distribution model could reduce the amount of chemical fertilizer application by 10 kg per mu and increase the yield by 8.1% per mu. In October, the company held an observation meeting on the achievements of Saturas intelligent irrigation in the apple orchard in Qixia City, Shandong Province. the intelligent irrigation experiment was carried out in June this year. The observation period was from July 1 to October when fruit trees were picked. Compared with the control area, Apple Inc increased the average yield per mu by about 10% and income by 20% to 30%. The company's technology has effectively improved the interests of local fruit farmers. We believe that the company's existing digital agricultural technology can fully cover all aspects of the planting chain, including soil detection, intelligent fertilizer distribution, new fertilizer, crop yield estimation, intelligent drip irrigation, pest control, digital service platform, etc., as the company's technology-related service commercial pilot project continues to be carried out, and the demonstration area successfully radiates more farmers to the nearby areas, the realization speed of the company's digital agriculture business may gradually increase. Future performance can be expected.
Profit forecast and investment advice. We estimate that from 2019 to 2021, the company will achieve a revenue of 7.2max 9.4 / 1.23 billion yuan and a net profit of 1.01,151,200 million yuan. We are optimistic about the expansion of the company's overseas business and the acceleration of the commercialization of digital agriculture to maintain the "buy" rating.
Risk tips: cooperation progress is not as expected, raw material price fluctuation risk, intelligent fertilizer business progress is not as expected, overseas business expansion is not expected, the acquisition of subsidiary goodwill impairment risk.
