1H22 performance is in line with our expectations
Andamai announced 1H22 results: income 18.796 billion yuan (YoY+24.8%), home net profit 732 million yuan (YoY+99.5%), 1H22 deducted non-net profit 655 million yuan (YoY+103.4%). The year-on-year increase in the company's profit in the first half of the year is mainly related to the global agrochemical cycle is in the upward stage, the company's products volume and price rise and other factors, the performance is in line with our expectations. The income of 1H22 company in Europe / North America / Latin America / India, Middle East and Africa / Asia Pacific is 42.03, YoY+7.3%/+26.4%/+37.9%/+2.4%/+49.1% 36.40, 39.94, 4.658 million, respectively. Corresponding to 2Q22 operating income of 9.78 billion yuan (YoY+24.2%), revenue since the listing of the company's quarterly profit record, return to the mother net profit of 304 million yuan (YoY+39.5%), deducting non-net profit of 242 million yuan (YoY+20.6%).
Trend of development
The volume and price of products have risen, and the company's 1H22 revenue has reached an all-time high. The company's 1H22 revenue reached an all-time high of 18.796 billion yuan, with sales of US $2.899 billion in US dollars. YoY+24%, calculated YoY+25%, in RMB and YoY+28%, at a fixed exchange rate, which was mainly driven by 20 per cent year-on-year growth in prices and 8 per cent year-on-year growth in sales. Of this total, 2Q22 has sales of US $1.479 billion in US dollars, while YoY+21%, has increased its sales price of YoY+25%,2Q22 preparations by 22% year-on-year at RMB and YoY+24%, at fixed exchange rates. We believe that thanks to the upward cycle of global agrochemical industry, the company's 1H22 revenue has reached an all-time high.
The global agrochemical industry is in a business cycle in 2022, which is good for the company's performance. Although the global agricultural price 2Q22 has a pullback, it is still higher than the historical average, and crude oil is at a high level. We believe that agricultural prices are high, stimulating the expansion of global acreage, increasing farmers' willingness to use drugs, and benefiting the global demand for agrochemical products. The global plant protection industry is in a business cycle in 2022, continuing to be optimistic about global agrochemical demand and good corporate performance.
The price of terminal preparation is expected to remain high. The purchasing price of crude drugs in the Chinese market is generally lower, mainly due to the increase in production capacity and the improvement of logistics. But in other parts of the world outside China, rising costs, rising energy prices and tight supply have pushed up the prices of similar crude drug products. We believe that the global demand for crude drugs is strong, the conflict between Russia and Ukraine brings uncertainty to the supply of raw drugs in Europe, the global prices of raw materials, intermediates and crude drugs may remain at a high level, and the prices of terminal preparations may remain high.
Profit forecast and valuation
Keep profit forecasts for 2022 and 2023 unchanged. It is estimated that the net profit in 2022 and 2023 is 1.534 billion yuan respectively, and the current A share price corresponds to the price-to-earnings ratio of 22.6 times / 18.0 times of 2022 pound in 2023. Maintain an outperform industry rating and a list price of 14.15 yuan, corresponding to 27.0 times 2022 price-to-earnings ratio and 21.5 times 2023 price-to-earnings ratio, which has 19.4% upside space compared with the current stock price.
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.