\u3000\u30 Shenzhen Fountain Corporation(000005) 53 Adama Ltd(000553) )
Andorra released its annual report for 2021: the annual operating revenue was 31.039 billion yuan, yoy + 9.12%, and the net profit attributable to the parent company was 157 million yuan, yoy-55.38%.
The strong growth of sales volume and price rise promoted the steady growth of sales throughout the year, reaching a record high. Priced in US dollars, the company’s sales in 2021 increased by 17% year-on-year to US $4.8 billion, a record high, mainly driven by a 12% increase in sales and a 4% increase in prices. The impact of the exchange rate is favorable, of which the average price of the company’s products increased significantly by 14% in the fourth quarter. Rising costs led to a decline in profit growth. Due to the rising prices of pesticide intermediates and technical drugs from China, high global energy costs and high global shipping and logistics costs, the company’s gross profit margin decreased by nearly 5 percentage points to 24.57%, the company’s EBITDA denominated in US dollars increased by 7% to US $671 million year-on-year, and the adjusted net profit decreased by 21% to US $139 million year-on-year (the adjusted performance excludes the impact of non recurring and non operating items).
In terms of subregions, the sales growth rate in China, North America and Latin America is relatively high, and the rise of Shenzhen Agricultural Products Group Co.Ltd(000061) price boosts the strong demand for pesticides. Priced in US dollars, the sales volume in China increased significantly by 59% throughout the year, and the brand preparation product line in the region continued to grow. The acquisition of Huifeng played a promoting role during the year; The strong pre-season demand in the agricultural market in North America and the strong willingness of farmers to purchase in advance led to an 18% increase in sales in the region; The overall sales in Latin America increased by 17%, the demand for pesticides in Brazil was strong, and the company raised product prices. In addition, sales in the Asia Pacific region excluding China increased by 16% and sales in Europe increased by 4%.
Differentiated product portfolio strategy helps to continue to drive business growth. While expanding the existing registered products to other crops and regions, the company is also promoting the development of product portfolio in the direction of higher value-added differentiation. The differentiated product portfolio with higher added value includes non patented products with high gross profit, high value and complex process, as well as unique compound mixtures and preparations, as well as innovative new products protected by patents and other intellectual property rights. We expect that through the implementation of the above product strategies, the company is expected to consolidate its dual competitive advantages. First, it will realize the initial listing in the market after the expiration of the original drug patent. Second, it will use the global layout to achieve cost competitiveness and continue to promote business growth.
It is expected to benefit from Syngenta group collaboration. As a global leader in non patented pesticides, the company is a unique member of Syngenta group. At present, the two sides have signed a series of cooperation agreements in the fields of finished product sales and distribution, raw material supply, procurement, logistics, production, supply chain, R & D and product registration, in order to reduce costs, improve process flow and improve the company’s sales. We believe that these internal collaboration projects are expected to continue to generate additional revenue for the company and improve productivity.
Profit forecast and investment rating of the company: as a global leading enterprise of non patented pesticides, the company’s differentiated product portfolio boosts business growth and benefits from the coordination within Syngenta group. We expect the company to continue to grow in the future. Based on the company’s 2021 annual report, we adjusted the company’s profit forecast from 2022 to 2024 accordingly. We predict that the net profit of the company from 2022 to 2024 will be 567 million yuan, 694 million yuan and 837 million yuan respectively, and the corresponding EPS will be 0.24, 0.33 and 0.36 yuan respectively. The corresponding P / E value of the current stock price will be 33, 27 and 22 times respectively. Maintain a “strongly recommended” rating.
Risk warning: Shenzhen Agricultural Products Group Co.Ltd(000061) price drops sharply; The progress of new product registration was less than expected.
