2020 the company's revenue was 10.4 billion, an increase of 17% over the same period last year, and its net profit was 350 million, an increase of 12% over the same period last year. The gross profit margin is 21.2% and the net profit margin is 3.4%. The profit per share is 0.3 yuan. We believe that after the completion of the Jiujiang base in February 21, the scale effect of Heart to Heart has been further consolidated, and the company has radiated the whole country through the three major bases of Henan, Xinjiang and Jiangxi. We believe that there will be explosive growth in 21 years. Finally, we give the target price HK $5, corresponding to the 21-22 forecast price-to-earnings ratio of 7.1 times and 5.4 times, respectively, 34% room for improvement from the current price, and maintain the buy rating.
Summary of the report
Over the past 20 years, the net profit of homing has increased by 10%, exceeding expectations. In 2020, the company's revenue was 10.4 billion, up 17% from the same period last year, and its net profit was 350 million, up 12% from the same period last year. The gross profit margin is 21.2% and the net profit margin is 3.4%.
The profit per share is 0.3 yuan.
The sales of chemical fertilizers and chemical products have increased steadily in the past 20 years. Affected by the epidemic in the past 20 years, global food prices have risen, and the development of land intensification has gradually accelerated, leading to a substantial increase in sales of Xinlianxin chemical fertilizers and chemical products. In the past 20 years, the company sold 1.94 million tons of urea products, an increase of 2 percent over the same period last year, and compound fertilizer sales of 1.61 million tons, up 17 percent.
Methanol sales were 360000 tons, up 788 per cent, and melamine sales were 140000 tons, up 6 per cent. Sales of dimethyl ether were 300000 tons, down 3%, while sales of furfuryl alcohol were 60,000 tons, up 33%.
New projects have been put into production one after another to further consolidate the advantage of heart-to-heart scale. In 20 years, the company completed the project of withdrawing from the city and entering the park in Henan, with an additional production capacity of 600000 tons of methanol. The Jiujiang base was put into production in February 21, with an additional capacity of 600000 tons of synthetic ammonia, 520000 tons of urea and 400,000 tons of dimethyl ether. The company will upgrade two or three markets in Henan in the second half of the year. 20 years is the peak of the company's capital expenditure, which is expected to decrease year by year in 21 and 22 years, and reducing debt has become an important task. We expect the company's asset-liability ratio to fall from 69% in 20 years to 64% in 22 years.
Target price of HK $5.0, buy rating. We believe that after the completion of the Jiujiang base in February 21, the scale effect of Heart to Heart has been further consolidated, and the company has radiated the whole country through the three major bases of Henan, Xinjiang and Jiangxi. We believe that there will be explosive growth in 21 years. Finally, we give the target price HK $5, corresponding to the 21-22 forecast price-to-earnings ratio of 7.1 times and 5.4 times, respectively, 34% room for improvement from the current price, and maintain the buy rating.
Risk hint: industry competition intensifies; epidemic situation intensifies.