Event: the company released its first quarter 2021 report that 21Q1 achieved revenue of 4.227 billion yuan, an increase of 50.70% over the same period last year, and net profit of 201 million yuan, an increase of 51.39% over the same period last year.
21Q1 revenue reached an all-time high in the first quarter, a large number of stocks may lay the foundation for high growth throughout the year. According to the financial report, the company's 21Q1 revenue exceeded 4 billion yuan for the first time. The reasons for the substantial increase are as follows:
Increased sales of sugar, year-on-year increase in sales made up for the adverse effects of falling sugar prices, resulting in an increase in income compared with the same period last year; the increase in net profit was mainly due to revenue boost gross margin, while investment income medium-and long-term contract liquidation benefit increased compared with the same period last year, also contributed 43 million yuan. At the same time, we noticed that the net operating cash flow 21Q1 was-1.988 billion yuan, with a change rate of-434.83% over the same period last year, mainly due to an increase in expenditure on centralized sugar procurement. We believe that as Q1 is a new sugar market and March is the off-season for sugar consumption, and the domestic sugar price is relatively low, the substantial increase in sugar procurement by the company at this time may mean a reserve of low-cost inventory for the second three quarters of the year, which lays a solid foundation for the good development of the business this year and the optimization of profitability this year.
In April 2021, the trend of internal and external sugar prices is improving, which is expected to bring good elasticity to the company's performance. Since April, international: ICE raw sugar has risen rapidly from a low of 14.70 cents / lb to 17.16 cents / lb, an increase of more than 16% in one month; domestic: the Zheng Sugar Index has continued to climb from a low of 5270 to more than 5510, and the price per ton has increased by more than 200 yuan per ton. We believe that the support for the rise in sugar prices at home and abroad mainly comes from:
1) in Brazil, as the US dollar against the real entered the concussion market, the price of crude oil hovered around US $60 per barrel, and the recovery of sugar-alcohol ratio provided some support for the decline in sugar production; 2) India, affected by the recurrence of the epidemic more seriously than in the past, the progress of sugar production and export may be run due to the lack of human, financial and material resources.
As a sugar importer, China's sugar price is still affected by the global sugar price. at the same time, combined with the historical domestic production cycle, it is possible for domestic sugar price to keep upward.
The company is the absolute leader of China's sugar industry. In 2020, the annual operating volume of sugar business reached more than 3 million tons, accounting for 21% of the country's total consumption, and the terminal market share continues to increase. At the same time, trusteeship operations are distributed in 22 sugar warehouses in major domestic transportation hubs and major sugar consumption markets, with a total storage capacity of 2 million tons. At the same time, the company is the main channel of sugar import in China and one of the largest sugar import traders in China, with a sugar refining capacity of 1.9 million tons per year. The continuous improvement of the company's sugar refining operating rate and continuous optimization of product structure have provided support for the steady growth of the company's sugar refining business performance; the company is also the leader of self-produced sugar in China, the company operates 13 sugar enterprises in China, with an annual output of 700000 tons of sugar, and operates Tully sugar industry in overseas Australia, with an annual output of 300000 tons of raw sugar.
Profit forecast & investment advice: on the basis of continuous optimization of fundamentals, the beneficiary domestic sugar gap continues to need to be replenished by imported sugar, and the upward price of sugar will bring good flexibility to the company's performance. It is estimated that from 2021 to 2023, the company will achieve revenue of 218.29 million yuan, net profit of 9.46 billion yuan and net profit of 12.48 billion yuan, corresponding to 0.58 billion yuan per share of EPS 0.44 pound. Maintain a "buy" rating.
Risk hints: policy change risk, sugar price fluctuation risk, exchange rate change risk, raw material supply risk