Events:
The company released its quarterly report for 19 years, with revenue of 1.542 billion yuan in the first three quarters of 1919, an increase of 46.48% over the same period last year, a net profit of 78 million, an increase of 588% over the same period last year, and operating cash flow of 95.81 million yuan, an increase of 1420% over the same period last year.
Main points of investment
In the traditional off-season in the third quarter, the month-on-month decline was in line with expectations: revenue in the third quarter increased by 10.57% compared with the same period last year, up 30.62% from the same period last year. Due to the impairment provision in the second quarter, the reverted net profit fell 11% month-on-month, up 1200% from the same period last year. The year-on-year improvement is mainly due to the change in the supply pattern of furanol, the key intermediate caused by the Tianjiayi explosion, as well as the increase in plant load and the company's institutional reform. Month-on-month slight decline is mainly due to the off-season demand for pesticides in the third quarter, and system maintenance is generally arranged.
The oligopoly pattern of carbamate pesticides is further strengthened: among the main products, propoxur and aldicarb are produced exclusively in China, while products such as carbofuran, methomyl and carbaryl are in the dominant position, and in recent years, the company grasps the development trend of high efficiency, low toxicity and low residue of pesticides, relying on the strength of Hunan Chemical Research Institute, focusing on the development of carbosulfan, carbofuran, thiosulfate and other products. The products are mainly customized by multinational corporations with large tonnage, there are basically no competitors in China, and the profits are more stable in the future.
The room for long-term development opened: the company reorganized its board of directors in September 19, marking the entry of the reform of state-owned enterprises into the middle and backcourt. Previously, the company announced plans to spend 840 million yuan to build heterocyclic pesticides and environmentally friendly pesticides. If these projects are fully put into production, they are basically equivalent to another Haili. Among the reserve varieties, salicylonitrile and methyl pyrimidine deserve more attention, with larger market capacity and higher technical barriers.
The progress of Zhongwei base is worth paying attention to: the company was registered and established in Ningxia Haili in October 19. Prior to this, Haili Group announced that it planned to invest 3 billion yuan in three phases of Zhongwei, with a planned land area of 1000 mu. The first phase of the project is scheduled to start construction in March 20, with an investment of 1 billion yuan to build high-performance new materials, high-efficiency pesticides and fungicides production equipment.
Profit forecast and investment rating: the company's operating income in 2019-2021 is expected to be 2.061 billion yuan, 2.494 billion yuan and 2.783 billion yuan respectively, the net profit returned to the parent is 149 million yuan, 241 million yuan and 289 million yuan respectively, and the EPS is 0.42,0.68,0.81 yuan respectively. The current stock price corresponds to 18x, 11x and 9x respectively. Taking into account the company's product categories and capacity reserves are expected to bring sustained growth to the company's performance, maintain the company's "buy" rating.
Risk hint: the comprehensive renovation of the coastal chemical parks in northern Jiangsu is gradually normalized, resulting in a decline in the price of related intermediates; the promotion of methyl pyrimidine is not as expected.
