The company's 2022H1 is expected to achieve a net profit of not less than 420 million yuan, an increase of more than 312% over the same period last year. The company issued a 2022H1 performance forecast that the net profit is expected to be not less than 420 million yuan, compared with 101.9 million yuan in the same period last year, an increase of more than 312% over the same period last year. The main reasons for the increase in performance are: (1) the external economic environment is still conducive to China's fine chemical industry, providing good market conditions for the Group's products, resulting in a significant increase in the Group's income; and (2) by streamlining the Group's production activities, further optimize its overall productivity and efficiency and curb the group's production costs.
Benefit from the rise in the price of cyanuric chloride. Affected by the overseas epidemic situation and extreme weather and other factors, the supply of raw materials is tight, and the rising prices of raw materials push up the market price of cyanuric chloride. According to Baichuan Information, as of July 1, 2022, cyanuric chloride was quoted at 255,000 yuan per ton, up 132% from the same period last year. Cyanide products are high-risk chemicals with high industry access qualifications. with years of production experience in the field of cyanide compounds, the company added cyanuric chloride products in 2017 and formally completed and put into production in 2020. We believe that with the further release of the company's cyanuric chloride production capacity, it is expected to contribute to a considerable revenue increase for the company.
Streamline and optimize the group's production activities to further improve the overall operational efficiency. In 2021, the production equipment of Weifang Baili was relocated and integrated into the production plant in Weifang Binhai, the company's production activities were more concentrated, and the overall productivity and production economies of scale were further improved. this measure successfully offset some of the adverse effects caused by the sharp rise in raw materials and manufacturing costs during the period. In addition, the company also continues to increase investment in improving safety and environmental protection production processes, continuously improve production activities, deepen the circular economy production system, and provide protection for the company's sustainable development.
Profit forecast and investment rating. We estimate that the return net profit of Tiande Chemical Industry in 22-24 years is 7.52 (+ 155%), 8.24 (+ 151) and 9.46 (newly introduced) million yuan respectively, corresponding to the EPS of 0.88,0.96 and 1.10 yuan per share respectively. Combined with the valuation of comparable companies and taking into account the difference in the valuation of AH shares, the company is given 8 times PE in 2022, corresponding to the target price of 7.02 yuan, calculated according to the exchange rate of Hong Kong dollar to RMB 0.84. The corresponding target price is HK $8.36 (the previous target price is HK $3.10, based on 10 times PE,+170% in 2021). Maintain the "better than the market" rating.
Risk hint. The risk of a sharp rise in raw material prices, a decline in product prices, and a slowdown in economic growth