Event Overview
The company released the 2020 annual report, during the reporting period, the company achieved operating income of 1.815 billion yuan, yoy+1.81%; to achieve a net profit of 117 million yuan, yoy-36.56%. In the fourth quarter alone, the company achieved operating income of 608 million yuan, yoy+13.84%; achieved a net profit of 15.3875 million yuan, and yoy-63.10%, increased by 121.93% compared with the previous quarter.
Analysis and judgment:
Chlortetracycline performance greatly improved, biological products for the first time to achieve a turnaround in 2020, the company achieved an operating income of 1.815 billion yuan, yoy+1.81%, specific point of view: veterinary chemicals, affected by COVID-19 epidemic, the company's veterinary chemicals exported to the United States is greatly affected, at the same time, affected by the domestic feed ban policy, the main sales market from the feed line to the breeding line The transition period brought about a temporary decline in revenue. During the reporting period, the company achieved 935 million yuan in revenue from veterinary chemicals, yoy-11.74%. In terms of veterinary biological products, after painstaking management in the past few years, the company's product recognition continued to improve, and its performance ushered in explosive growth. during the reporting period, the company achieved revenue of 268 million yuan from veterinary biological products, 34.256 million yuan from yoy+210.22%; drug and feed additives, 55.7959 million yuan from yoy+2.65%; environmental protection business, and 55.7959 million yuan from yoy-14.22%. Agricultural products processing revenue of 456 million yuan, yoy-3.29%; other business revenue of 64.9974 million yuan, yoy-2.73%.
Feed ban promotes industry expansion, volume and price increases contribute to performance elasticity. We believe that the implementation of the feed ban policy is of great benefit to the company. The main logic lies in: first of all, the feed ban policy explicitly forbids 15 drug feed additive approval numbers, including oxytetracycline and flavomycin, and retains the use of chlortetracycline in treatment, making room for the expansion of chlortetracycline market space. Secondly, before the implementation of the feed ban policy, the company's chlortetracycline products were mainly aimed at feed manufacturers, which were greatly restricted by downstream feed manufacturers. After the implementation of the feed ban policy, the company's chlortetracycline products were directly oriented to the breeding terminal, and the market coverage has been greatly improved. Finally, before the implementation of the feed prohibition policy, the addition standard of feed for promoting growth was 25-75PPM. After the implementation of the feed ban policy, the addition standard was raised to 400-600ppm, and the usage was greatly increased. Based on the continuous improvement of domestic demand for chlortetracycline, the company's capacity expansion plan for 52000 tons of chlortetracycline is steadily advancing and is expected to be put into production by the end of this year. With the gradual release of chlortetracycline production capacity, chlortetracycline is expected to contribute to the company's short-term profit elasticity.
Based on the big animal protection strategy, it is expected to cultivate a new profit growth point of the company.
The company has laid out veterinary biological products for many years and acquired Hangzhou Youben in 2015. The products cover pigs, poultry, cattle and sheep vaccines. The main products include blue ears and rings. The income of blue ears has exceeded 100 million yuan. With the continuous improvement of the company's product recognition, the company's biological products sector performance ushered in a period of rapid development. The company will veterinary biological products as the strategic focus of the next development, the layout of Bovine and Sheep brucellosis, Porcine foot-and-mouth Disease, rabies inactivated vaccine and other varieties, is expected to be quickly reflected in the performance. In addition, the company actively pays attention to the development trend of the industry, and plans to lay out the new track areas such as pet drug market, anti-drug products and so on. We believe that there is a broad market for veterinary biological products, and the company is expected to cultivate them into a new profit growth point for the company.
Investment suggestion
In the short term, the continuous improvement of chlortetracycline demand will contribute to the company's profit elasticity; in the medium to long term, the rapid development of the company's animal protection business will become a strong driving force to support the company's continued high performance. We maintain our expectation that the company's income from 2021 to 2022 will be 2.301 billion yuan, and its net profit will be 276 million yuan. At the same time, we estimate that the company's operating income will be 3.283 billion yuan and its net profit will be 584 million yuan in 2023. To sum up, we expect the company's EPS to be 0.43 EPS 0.74 USD 0.92 yuan respectively from 2021 to 2023, and the current share price to maintain a "buy" rating corresponding to 14 PE 8max 6X, respectively.
Risk hint
The risk of rising prices of raw materials, the risk of abnormal exchange rate fluctuations, and the risk of policy disturbance.