Event: the company released its Triple report for 2023. In the first three quarters of 2023, the company achieved revenue of 24.66 billion yuan, down 12.17% from the same period last year; net profit of-1.04 billion yuan, down 235.7% from the same period last year; and net profit of-1.12 billion yuan, down 270.4% from the same period last year. 2023Q3, the company achieved revenue of 7.41 billion yuan in a single quarter, down 20.2% from the same period last year and 14.3% from the previous year; the net profit returned to the mother was-800 million yuan, down 2320% from the same period last year, and the loss increased by about 470 million yuan compared with the same period last year.
Plant protection product volume price reduction, superimposed inventory price loss, the company's performance is under pressure. Due to factors such as high inventory in channels and high overseas interest rates, 23Q1-Q3, the company's overall sales volume fell 10% year-on-year, price dropped 5%, company product sales dropped 12%, and price dropped 13%. In terms of business segment (in US dollars), 23Q1-Q3 's revenue from herbicides, pesticides, fungicides and fine chemicals fell 20.8%, 12.1%, 7.3% and 32.6%, respectively, compared with the same period last year. From a regional perspective (in US dollars), 23Q1-Q3 's sales in EAME (Europe, Africa and Middle East), North America, Latin America and Asia Pacific fell 4.9%, 22.8%, 21.4% and 20.3% respectively compared with the same period last year, of which sales in China fell 25.1%. In terms of expenses, by taking a number of effective cost management measures, 23Q1-Q3 's management expenses decreased by 26.6% compared with the same period last year, and the management expense rate decreased 0.57pct compared with the same period last year. In addition, due to the existence of high-cost inventory in the previous period, 23Q1-Q3 has a total provision of about 220 million yuan for inventory decline, of which 23Q3 single-quarterly provision for inventory decline is about 110 million yuan.
Expand the differentiated product line and continue to promote new product registration. In 2022, the company's new product introduction rate (new products launched in the past five years accounted for the contribution of annual sales in 2022) reached 22%. After entering 2023, the company continues to expand its differentiated product line, registering in various markets around the world and launching a variety of new products. 23Q3, with the company T.O.V. Almada, a ternary compound fungicide based on preparation technology, is on the market. In addition, the company also launched the natural copper-based fungicide Mastercop ACT in the German market, the herbicide Grindstone in the Australian market, the herbicide Adaca in the Indian market and the pre-seedling herbicide Apresa in the Argentine market. In addition, in terms of product registration, 23Q3's Maxentis products have been registered in Malta, the Czech Republic and Canada, marking the first registration of the company's propylthiazole mixture in North America. At the same time, other home-made prothiazole products have also been registered, of which Forapro was first registered in Sweden and Malta, Maganic in the Czech Republic and Soratel in Poland.
Earnings forecast, valuation and rating: due to the high inventory of channels, high overseas interest rates and other factors, 23Q1-Q3 product sales and prices have declined, the performance is under pressure. Considering that the price of plant protection products is still low, we lower the company's profit forecast for 23-25 years. It is estimated that the 23-25 year net profit of the company will be-11.10 (down 465%) / 5.68 (down 26.2%) / 8.44 (down 29.8%) respectively.
At present, the global farmers' demand for plant protection products is still good. With the effective elimination of channel inventory, the company, as the global leader in generic pesticide preparations, is expected to gradually pick up its profitability with its own differentiated product strategy. maintain a "buy" rating.
Risk tips: pesticide product price fluctuations, lower-than-expected demand, environmental protection and production safety risks.