Forecast that 1H22 profit will increase by 75.2% RMB129.2% compared with the same period last year, which is in line with market expectations. The company expects the net profit of 1H22 to be RMB6.43-841 million, an increase of 75.2% RMB129.2% over the same period last year, the basic EPS is RMB0.28-0.36, and the net profit after deduction is RMB5.66-764 million, an increase of 75.8-137.3% over the same period last year, which is in line with market expectations. According to the announcement, we estimate that the net profit of 2Q22 is expected to be 2.15-414 million yuan, (- 1.4)-(+ 89.9)% compared with the same period last year. The performance growth is mainly in line with the increase in the volume and price of the company's agrochemical products. Since the company's product sales price entered the upward trend in 3Q21 year, 2Q22 sales price has achieved a significant double-digit increase compared with the same period last year; at the same time, higher sales volume has contributed to sales growth. However, the exchange rate trend and the supply situation over the same period pose a challenge to sales.
Pay attention to the main points
The company's quarterly revenue is expected to be the highest since it went public. The company expects 2Q22 annual sales in dollar terms to grow by about 22% year-on-year, and in yuan terms to grow by 24% year-on-year, which is basically in line with the year-on-year growth rate of 1Q22 revenue (+ 25%). Based on this data, we estimate that the company's 2Q22 revenue is about 9.767 billion yuan, which is expected to be the highest in a single quarter since the company went public. We believe that the company's quarterly revenue reached a new high, on the one hand, it benefited from the improved global agrochemical demand, on the other hand, it was related to the production of the company's new base in Jingzhou, the gradual release of Ando Maihui's production capacity, the increase in production and the increase in revenue.
The global agrochemical industry is in a business cycle in 2022, which is good for the company's performance. The company expects 1H22 revenue to grow by nearly 25 per cent year-on-year, reflecting overall 1H22's rising global agricultural prices driving up demand in the global agrochemical market. Considering that global food prices are still high despite a short-term correction, and crude oil is at a high level, we believe that agricultural prices are high, farmers' willingness to use drugs is increased, which is good for the demand for agrochemical products, and the global plant protection industry is in a business cycle in 2022. Continue to be optimistic about global agrochemical demand, global pesticide prices may maintain a high level, good company performance.
The price and cost of crude drugs go down, which may be good for the performance of the company. On July 10, 2022, the price index of Zhongnong Lihua crude drugs reached 159.85 points, down 21.8% from 204.31 points on January 2, 2022. The decline in pesticide prices is related to the scientific adjustment of 4Q21 energy consumption double control policy, the recovery of domestic crude drug production capacity and the increase in supply. We believe that if the price of the terminal preparation continues to be maintained, the price and cost of the original drug will fall, which may be good for the performance of the company.
Profit forecast and valuation
We maintain our 2023 profit forecast for 2022amp, with a net profit of 12.22 yuan and 1.534 billion yuan, respectively, and the company's stock price corresponds to a 23-year price-to-earnings ratio of 21.9 million 17.4x. Continue to be optimistic that the global agrochemical industry is in the business cycle in 2022, we maintain the target price of 14.15 yuan, corresponding to 23.4% of the upside space, and the target price corresponds to the price-to-earnings ratio of 27.2pm in 2022x23, maintaining an outperforming industry rating.
Risk
Large exchange rate fluctuations and derivatives risks. Goodwill impairment risk. The price of crude drug fluctuates greatly. The recovery of the global agrochemical industry was less than expected. Risks of safety and environmental protection.