Event: the company issued a performance forecast that the net profit attributed to shareholders of listed companies in the first quarter of 2020 is expected to be 52.8276 million yuan to 56.601 million yuan, an increase of 40% and 50% over the same period last year.
The main business grew steadily, and the animal vaccine sector reversed losses.
The company has been in the field of animal vaccine for many years. In the first quarter of this year, with the gradual recovery of the stock of pigs downstream and the company's approval number for blue ear vaccine, the company's animal vaccine business ushered in an inflection point. With the gradual enrichment of the product system and the steady progress of market development, the sales income of the animal vaccine plate has increased significantly compared with the same period, realizing a turnaround from losses to profits. At the same time, the company took various measures to actively deal with the epidemic, which was not significantly affected in the first quarter, and the production and sales of feed additives and veterinary chemicals, environmental protection business and corn starch processing business were stable.
The demand for chlortetracycline is expected to pick up, and the company ushered in a rise in both quantity and price.
Chlortetracycline is the most commonly used veterinary antibiotic because of its low price and good effect. As downstream users have low demand elasticity and low price sensitivity to chlortetracycline, enterprises can transfer part of the cost pressure downstream by raising prices to ensure their own profit margins. The price of the company's domestic chlortetracycline products has increased by 10% since February this year. Taking into account the changes in use and with reference to the average head usage in the United States, we estimate that the potential consumption of chlortetracycline in China is about 150000 tons, while the domestic sales volume is about 40,000 tons in 2018, there is still a lot of room to be excavated. In the future, with the continuous replenishment of large-scale factories and the improvement of breeding concentration, the demand for the use of chlortetracycline is expected to further open, while the tight supply side makes chlortetracycline have room for continuous price increase.
Animal vaccines have been laid out for many years, and 20 years is expected to usher in the harvest period.
In recent years, the company has quickly entered the veterinary vaccine industry through the merger and acquisition of Hangzhou Youben and Ptek of the United States, and has become a rising star in the industry. Relying on two vaccine business platforms at home and abroad, and making full use of the vaccine of the international advanced technology development company, the company has formed a strong technical research and development capability and product document number resources. The company actively increases the scientific research investment and technological innovation of the vaccine business, and cooperates with a number of scientific research institutes and colleges to transform the production process and improve the product quality of the company. With the continuous increase of the company's investment in veterinary vaccine research, the listing of new vaccines in the future will add new business growth points for the company. The company's vaccine business is expected to bottom out as the epidemic stabilizes and downstream replenishment continues to pick up.
Profit forecast and investment suggestion
It is estimated that the annual return net profit in 19-20-21 is RMB 1.83, 280, and RMB 375 million, compared with 12.05%, 52.51, 34.07, and 0.59, respectively. We believe that the demand of the chlortetracycline industry is rigid, the competition pattern is good, and the company has a solid leading position and pricing power; at the same time, the company actively promotes the development of its business in the field of vaccine and environmental protection, and continues to enhance its competitiveness. the performance is expected to achieve steady growth and maintain the "buy" rating.
Risk hints: the risk of policy change; the risk of epidemic; the risk that new product expansion is not as expected.