Hailir Pesticides And Chemicals Group Co.Ltd(603639) (603639)
Investment logic
Two wheel drive of technical drugs and preparations, with obvious advantages of integrated industrial chain. Hailir Pesticides And Chemicals Group Co.Ltd(603639) is a national designated pesticide production enterprise. It is a large agrochemical group integrating R & D, production and sales of pesticides and functional fertilizers. Based on pesticide preparation products, the company has gradually extended to the business field of upstream technical drugs and intermediates. At present, it has basically formed an integrated industrial chain pattern of coordinated development of preparations, technical drugs and intermediates.
The integrated layout of new nicotine insecticides and perfect product structure. At present, the company has a production capacity of 4000 tons of core products imidacloprid and acetamiprid; The company’s second-generation nicotine new products thiamethoxam and thiamethoxam technical drugs have a total capacity of 3000 tons, which is in the stage of capacity climbing. The capacity of the third-generation nicotine insecticide 500 tons of furamethoxam is currently under construction and is expected to be completed by the end of 2022. Compared with competitors, the company has a complete layout of new nicotine insecticide products, supporting imidacloprid and acetamiprid raw materials dichloro, thiamethoxam and thiamethoxam supporting raw materials thiazole. The integrated layout of raw materials of the company further optimizes the cost space while ensuring the stability of raw drug production.
Affected by supply and demand, the price of pesticide products continued to rise. After October 2021, the price of pesticide has been rising all the way, supported by the improvement of supply and demand pattern and cost. The price of imidacloprid, the company’s core product, has increased from 150000 yuan / ton in the third quarter to 250000 yuan / ton at present, acetamiprid has increased from 122000 yuan / ton in the second quarter to 250000 yuan / ton at present, and pyrazole ether ester has increased from 155000 yuan / ton to 300000 yuan / ton at present, We expect that with the advent of the traditional peak season of winter storage and spring farming and the continuous low inventory of the whole industry, the product price is expected to remain high.
Enrich the categories of pesticide products, and the expansion of new projects helps long-term growth. In April 2020, the company invested about 2 billion yuan to build hengning phase I technical drugs and intermediates project. Hengning phase I project is expected to be completed by the end of 2021. We estimate that hengning phase I project will bring 1.71 billion yuan of revenue to the company after it is fully put into operation from 2022 to 2023; In April 2021, the company started the construction of hengning phase II project. We calculated that after the phase II project is fully completed, it will contribute RMB 5.886 billion to the company’s revenue (including RMB 3.3 billion for 8000 tons of propionazole).
Profit forecast and investment suggestions
We estimate that the net profit attributable to the parent company from 2021 to 2023 will be RMB 478 million, RMB 711 million and RMB 879 million respectively; EPS is 1.41, 2.09 and 2.58 yuan respectively, and the current market value corresponding to PE is 17.55x, 11.82x and 9.56x respectively. We give the company 15 times PE in 2022, and the target price is 31.35 yuan / share. For the first time, it will be rated as “overweight”.
Risk statement
Risk of intensified market competition; Risk of falling product price; Risk of demand falling short of expectation; Risk that the progress of new projects is less than expected; Risk of lifting the ban; Risk of senior executives’ reduction; Exchange rate fluctuation risk
