\u3000\u30 Beijing Jingyeda Technology Co.Ltd(003005) 75 Jiangsu Flag Chemical Industry Co.Ltd(300575) )
Event: the company released its annual report for 2021. In 2021, it achieved a revenue of RMB 2.193 billion, a year-on-year increase of + 17.78%, and a net profit attributable to the parent company of RMB 214 million, a year-on-year increase of + 8.88%, with a weighted average roe13.5% 99%, asset liability ratio 47.29%. In the fourth quarter, the company achieved a revenue of 685 million yuan in a single quarter, a year-on-year increase of + 56.57%, and the net profit attributable to the parent company was 87 million yuan, a year-on-year increase of + 91.96% and a month on month increase of + 155.88%. The company plans to distribute a cash dividend of 3.00 yuan (including tax) for every 10 shares, and increase 5 shares for every 10 shares to all shareholders with the capital reserve. The company’s annual performance increased slightly year-on-year, and the performance in the fourth quarter exceeded expectations.
Affected by the shutdown of Huai’an base and the rise of raw materials, the company’s annual performance increased slightly year-on-year. The gross profit margin of the company’s sales in 2021 was 21.83%, a year-on-year decrease of 1.42 percentage points, and the net profit margin was 9.74%, a year-on-year decrease of 0.80 percentage points, mainly due to the rise in the price of upstream raw materials; The net operating cash flow was 141 million yuan, with a year-on-year increase of – 56.06%, which was mainly due to the increase in the proportion of overseas major customers with a long accounting period and the occupation of funds for production and preparation at the end of the year; The net cash flow from investment activities was – 451 million yuan, a year-on-year increase of + 173.29%, mainly due to the increase in investment in new projects; The construction in progress was 518 million yuan, a year-on-year increase of + 140.93%, mainly due to the increase of new projects in Huaibei base; Bills payable and accounts payable were 667 million yuan, a year-on-year increase of + 87.89%, mainly due to the increase in payments made by bank acceptance bills and the increase in accounts payable for new projects; In the fourth quarter of 2021, safety accidents occurred in other enterprises in Huai’an industrial park where the subsidiary Guorui chemical is located, resulting in passive temporary parking. The annual performance of Guorui chemical in 2021 was only 21 million yuan, and the annual performance of the company increased slightly year-on-year.
Relying on the industrial chain transfer of international agrochemical giants, the concentration of pesticide CMO market has increased rapidly, and the company will benefit greatly in the future. The company is mainly engaged in products such as chlorofluoropyroxyacetic acid, thiamethoxam and loudiurea, with a market share of 40-60%, which is in a leading position in the industry. At present, more than 600 pesticide technical drugs have been developed and used, and more than 100 pesticide registration certificates and more than 50 production license / approval certificates have been obtained in China, with rich varieties in reserve. Under the background of the slowdown of the global pesticide market and the gradual reduction of the number of new varieties on the market, the market share of non patented pesticides continued to increase, and the pesticide CMO market ushered in a period of rapid development. Multinational pesticide enterprises such as kedihua, Bayer, Syngenta and BASF are the company’s strategic suppliers. Under the strategic supplier mode, the company is expected to strengthen the cooperative relationship through increasing the cooperation of new products in the future, undertake more orders of technical drugs, and provide guarantee for the company’s future growth.
Build the third production base, and the Huaibei base project will drive high growth in the next 2-3 years. The company invested about 2 billion yuan in Huaibei base to build 15500 tons of new pesticide technical drugs, including 9 non patent technical drugs and 1 self-developed new pesticide. Among them, 9 technical drug varieties are products with rapid growth in downstream market demand and less or no supply in China. The construction of the new base began in early 2021. According to the feasibility analysis report of the company, the revenue of Huaibei project is expected to be 4.1 billion yuan after its completion. The Huaibei project has laid the foundation for the growth of the company in the next 2-3 years.
Profit forecast and investment suggestions: we expect the net profit attributable to the parent company from 2022 to 2024 to be RMB 332 / 417 / 519 million, with a year-on-year ratio of 55.2% / 25.9% / 24.3%, EPS of RMB 1.60, 2.02 and 2.51 respectively. At present, the PE valuation corresponding to the stock price is 11.9/9.5/7.6 times respectively, maintaining the “buy” rating.
Risk warning: the construction progress of the new project is not as expected, the price of raw materials fluctuates sharply, the risk of safe production and the risk of sharp fluctuation of exchange rate.
