Event: the company issues a half-year performance forecast for 2023. In the first half of 2023, the company is expected to achieve a net profit of 180% to 210 million yuan, a decrease of 82.7% to 85.2% compared with the same period last year, and an estimated net profit of 183% to 213 million yuan, a decrease of 82.8% to 85.2% over the same period last year. Among them, 23Q2 is expected to achieve a net profit of 0.56 billion yuan to return to its mother in a single quarter, down 84.8% to 90.1% from the same period last year, and 30.1% to 54.4% from the previous quarter.
Comments:
The prices of raw pesticides such as glyphosate fell, and the performance of 23Q2 declined compared with the previous month. In the first half of 22 years, due to the geopolitical conflict between Russia and Ukraine and other factors, the global concern about pesticide supply accumulated a high inventory. Since 22Q3, global pesticide inventory has been high, resulting in a continuous decline in pesticide prices. After entering 23 years, the global high inventory of pesticides has not been significantly digested, and the prices of related pesticide products continue to decline. The company's pesticide products are mainly herbicides and pesticides. According to iFinD data, the 23Q2 domestic herbicide price index and pesticide price index fell 50.9% and 36.1% respectively from the same period last year, down 29.0% and 23.4% respectively from the previous month. Among them, the average price of glyphosate 23Q2, the company's main product, fell 54.3% from the same period last year, and 34.2% from the previous month. After entering July of 23 years, the domestic glyphosate price gradually rebounded, which affected the domestic herbicide price index to rise slightly, while the pesticide price index gradually stabilized. With the further elimination of pesticide stocks and the rebound of product prices, the company's profitability is expected to recover gradually.
We will promote the construction of the second and third bases, optimize the industrial chain, and lay out flame retardants to create new growth points. In terms of herbicides, the company has 70,000 tons / year glyphosate, 46,000 tons / year amide series products and 10,000 tons / year production capacity of Metolachlor; in terms of pesticides, the company has a production capacity of 50,000 tons / year of diazinon and 15,000 tons / year of dichlorvos.
In recent years, the company has laid out the second and third production bases in Zhijiang, Hubei and Guizhou, respectively, to promote the industrialization of innovative drug JS-T205 and the layout of phosphorus chemical recycling industry chain. In addition, in order to open up new profit growth points, the company has organophosphorus flame retardant products. In 2022, the company's production units of 20,000 tons / year phosphorus oxychloride, 10,000 tons / year BDP and 30,000 tons / year TCPP have entered the normal production plant. At the same time, the company will further expand the production capacity of 50,000 tons / year TCPP and 15,000 tons / year BDP.
Profit forecast, valuation and rating: due to the decline in the price of raw pesticides such as glyphosate, 23H1's profitability weakened and its performance was lower than expected. Although the price of glyphosate has rebounded to some extent, the prices of other pesticides are still at a low level and profits have not recovered significantly, so we downgrade the company's profit forecast for 23-25 years. It is estimated that the 23-25 year net profit of the company will be 6.84 (down 18.2%) / 8.64 (down 7.7%) / 9.90 (down 5.3%) respectively. With the gradual elimination of global pesticide stocks, the demand for raw pesticides is expected to gradually improve, and the company's profitability will gradually recover. At the same time, the company actively layout flame retardants and other new profit growth points, is expected to continue to make efforts to maintain the company's "overweight" rating.
Risk tips: product and raw material price fluctuations, lower-than-expected demand, environmental protection and production safety risks.