Event: the company released its annual report in 2019 and quarterly report in 2020, and its revenue in 2019 was 19.472 billion yuan, an increase of 9.99%. In the first quarter of 2020, the company realized a net profit of 593 million yuan, an increase of 22.73%. In the first quarter of 2020, the company realized operating income of 4.069 billion yuan, a decrease of 11.65% over the same period last year; and net profit of 101 million yuan, an increase of 73.79%.
The revenue increased steadily in 2019, and the growth rate of return net profit was relatively high.
In terms of products, the company's sales revenue of fuel ethanol and its by-products reached 9.302 billion yuan (+ 13.79%) in 2019, accounting for 47.77%. The company has improved the level of raw material diversification in fuel ethanol production through technological breakthroughs, reduced production costs according to the switching of different raw materials, and fuel ethanol sales continued to grow in 2019. The company's revenue from selling starch and its by-products reached 3.654 billion yuan (- 7.55%), accounting for 18.76%; the company's sales revenue from sugar products reached 2.686 billion yuan (+ 28.03%), accounting for 13.79%; the company's monosodium glutamate and its by-products sales revenue reached 1.318 billion yuan (+ 37.95%), accounting for 6.77% The company's sales revenue of citric acid and its salts and by-products reached 800 million yuan (+ 1.45%), accounting for 4.11%. In terms of profitability, the gross profit margin of the fuel ethanol sector in 2019 was 15.13%, which was lower than the same period last year, which was mainly affected by the decline in the sales price of fuel ethanol; the gross profit margin of the starch plate was 12.61%, which was lower than that of the same period last year, which was mainly affected by the rising cost of raw materials; overall, the company's comprehensive gross profit margin was 14.05%, down 2.33 pct from the same period last year; and the net sales margin was 2.87%, which remained basically stable. We believe that the company's profitability has declined due to the decline in crude oil prices in 2019 and the increasingly fierce competition in the corn processing industry.
Due to the need to adjust the product structure due to the epidemic, Q1 expanded the production capacity of medical and sterilized alcohol in 2020Q1, and the company realized a net profit of 101 million yuan, an increase of 73.79% over the same period last year. On the one hand, the company reduces production costs through the diversification of raw materials, on the other hand, due to the needs of the epidemic, the company timely adjusts its product structure and production capacity to expand the production capacity of medical and sterilized alcohol. As a leader in the corn processing industry, the company has better profitability. We believe that due to the longer-than-expected duration of the overseas epidemic, with the transformation of the company's existing production capacity and the further improvement of pharmaceutical and alcohol production capacity, or a steady increase in contribution to the company's performance, the company's profitability will be enhanced.
Fuel ethanol leading asset injection is completed, is expected to usher in the same rise in volume and profit!
In October 2018, the company issued shares to purchase assets approved by the CSRC. After the company completed the asset injection, the company's fuel ethanol production reached 1.35 million tons, with a market share of more than 40%. At the same time, the main supply is realized in the closed areas where the designated enterprises are located (Heilongjiang, Anhui, Guangxi, northern Jiangsu, southern Shandong and other places). We believe that as the company continues to expand its production capacity in the future and control production costs through the diversification of raw materials, the company may usher in a rise in volume and profit and highlight the leading value of the industry!
Investment suggestion: due to the completion of the company's major asset restructuring project in 2020, the scope of the consolidated statement has changed greatly. we believe that with the diversification of raw materials to control production costs and enrich the product structure, the company's profitability is expected to continue to improve in the future. It is estimated that the company will achieve an income of 210.07pm 231.29shock 261.75 (the previous value is 20613,23836) in 2020-2022. The net profit of return to the mother is 6.32 pesks 7.74 paces 9.91 (the previous value is 427 scarps 635 million), and the "buy" rating is maintained taking into account the market space of fuel ethanol and the company's leading advantages.
Risk tips: sales are not as expected, policy promotion is not as expected, raw material prices are rising risk, epidemic risk
