\u3000\u3 China Vanke Co.Ltd(000002) 258 Lier Chemical Co.Ltd(002258) )
Key investment points
Event: the company released the annual report of 2021. The annual revenue was 6.49 billion yuan, a year-on-year increase of + 30.7%, and the net profit attributable to the parent company was 1.07 billion yuan, a year-on-year increase of + 75.2%; In the fourth quarter, the revenue was 2.22 billion yuan, a year-on-year increase of + 37.7%, a month on month increase of + 97.8%, and the net profit attributable to the parent company was 460 million yuan, a year-on-year increase of + 135.7%, a month on month increase of + 330.8%.
The company overcame the impact of shutdown and its performance exceeded expectations in the fourth quarter. In the fourth quarter of 2021, the glyphosate market rose rapidly, with an average price of 363000 yuan / ton in the fourth quarter, up 35.4% month on month. At present, the latest quotation is 255000 yuan / ton, which is lower than that in the fourth quarter, mainly due to the delay of terminal demand and heavy market wait-and-see mood. We are still optimistic about the continuation of the boom of glyphosate in the year. In addition, the upstream and downstream price transmission has increased since the fourth quarter of 2021, and chlorinated pyridine products with high raw material cost pressure have also generally increased. In terms of the company, Mianyang base basically resumed production in October, and the annual sales volume of technical drugs increased by 6.5% year-on-year. With the increase of volume and price, the company’s performance exceeded market expectations.
The substitution of highly toxic pesticides and the promotion of genetically modified organisms have driven the rapid growth of demand for glufosinate. Highly toxic pesticides are gradually banned worldwide. For example, 14000 tons of paraquat will be banned in 2020. At the same time, the global GM planting area is growing steadily at a rate of about 5% per year, and the demand for glyphosate resistant crops is expected to grow simultaneously. In addition, the demand growth from glyphosate and glufosinate ammonium combination is also considerable. As the leader of glyphosate, the company has an existing production capacity of 15400 tons, which will fully benefit from the product boom.
The company is the leader of chlorinated pyridine pesticides, with significant integration advantages. With a production capacity of 1300 tons of chlorpyridyl and chlorpyridyl intermediates, bike is the second-generation subsidiary of chlorpyridyl, which has a reliable production capacity of 2800 tons of chlorpyridyl and chlorpyridyl intermediates in the world. Under the background of stricter requirements on energy consumption and environmental protection, we judge that the profitability of the company’s Chlorinated pyridine products will remain a high profit center in the future.
Relying on the moat of technical barriers, innovative companies have full growth. The company took the lead in the layout of l-glufosinate and built 3000 tons and 20000 tons of production capacity in Guang’an and Mianyang respectively. The former is expected to be put into operation in 2022. The application amount of l-glufosinate is only half of that of ordinary glufosinate, which will accelerate the upgrading. In addition, the company reserves new varieties such as oxazolidinyl ester, chlorfenoxamide and flame retardant to support the long-term development of the company.
Profit forecast and investment suggestions. It is estimated that the company’s EPS from 2022 to 2024 will be 2.78 yuan, 3.32 yuan and 4.05 yuan respectively. As the leader of glufosinate and Chloropyridine pesticides, the company has strong R & D and engineering development capacity, rich reserve projects, strong certainty of future growth, and maintains the “buy” rating.
Risk warning: the project under construction is not put into operation as expected, the price of raw materials rises sharply, and the price of main products fluctuates.
