\u3000\u3 Jiangsu Eastern Shenghong Co.Ltd(000301) 035 Shandong Weifang Rainbow Chemical Co.Ltd(301035) )
Event: Shandong Weifang Rainbow Chemical Co.Ltd(301035) released the annual report of 2021, realizing an operating revenue of 9.797 billion yuan, a year-on-year increase of 34.39%; The operating profit was 1.013 billion yuan, a year-on-year increase of 78.79%; The net profit attributable to the listed company was RMB 82 million, an increase of 800% year-on-year. Based on the total share capital of 276 million shares, the diluted earnings per share was 2.90 yuan and the operating cash flow per share was 2.86 yuan. Among them, the operating revenue in the fourth quarter was 3.039 billion yuan, a year-on-year increase of 114.44%; The net profit attributable to the shareholders of the listed company is 350 million yuan (09 million yuan in 2020); Equivalent to single quarter eps1 27 yuan. The company released the performance forecast for the first quarter of 2022. The company expects to realize a net profit attributable to the parent company of 350450 million yuan in the first quarter of 2022, an increase of 264% – 368% over the same period last year. The increase in the company’s performance in the quarter was mainly due to the significant increase in the sales volume and sales revenue of its main products in major markets relying on the global marketing network and the business model of “light structure and rapid response”.
The significant increase in sales scale and gross profit margin is mainly due to the significant increase in the selling price of herbicide business. In 2021, the company’s operating revenue increased by 2.507 billion yuan year-on-year. By category, the herbicide business revenue increased by 2.191 billion yuan year-on-year, the pesticide business increased by 180 million yuan year-on-year, and the fungicide business increased by 04 million yuan year-on-year. The revenue growth mainly came from the herbicide business. In terms of volume, the company’s main product output was 191000 tons in 2021, with a year-on-year increase of 1400 tons; The sales volume was 249000 tons, a year-on-year decrease of 6700 tons; The trade volume was 58000 tons, a year-on-year decrease of 8100 tons. We believe that the decrease in the sales volume of the company is mainly due to the decrease in the scale of trade products directly sold after outsourcing. In terms of price, the company’s herbicide product price showed an upward trend throughout the year. The average sales price in the first half of 21 years was 30000 yuan / ton and rose to 43800 yuan / ton in the second half of the year. Therefore, we speculate that the rise of herbicide price and sales volume is the main factor driving the growth of the company’s sales scale.
Period expenses: sales expenses and management expenses decreased year-on-year, and R & D investment maintained a high growth. In 2021, the company’s sales expense ratio was 2.2%, the management expense ratio was 3.0%, and the financial expense ratio was 1.0%, yoy yoy-0.2 / + 0.1 / – 2.2pcts respectively. The total amount of the three expenses was 610 million yuan, a year-on-year decrease of 13 million yuan, mainly due to the company’s exchange loss decreased by 126 million yuan year-on-year under the condition of exchange rate fluctuation due to a series of hedging and other measures taken to manage exchange rate risk exposure. The company’s R & D expenses were 312 million yuan, a year-on-year increase of 137 million yuan; The R & D expense rate is 3.2%, yoy + 0.1pcts. The company’s R & D expenses are mainly invested in the development and utilization of advanced technologies and production processes of herbicides and fungicides. The investment and expansion of R & D projects will further enrich the company’s product layout and enhance the company’s market competitiveness.
The unique business model realizes “global made in China to Chinese brand globalization”. In 2021, the company’s global registration fee increased by about 50 million yuan year-on-year (excluding purchase registration payment). As of December 31, 2021, the company had 242 Chinese registrations, 4007 overseas registrations and 925 overseas pesticide product registration certificates (3082 overseas registration certificates in 2020).
Profit forecast and Valuation: comprehensively considering the production of the company’s new projects and the product price trend, the company’s net profit from 2022 to 2024 is expected to be 1.01 1.19 1.3 billion yuan respectively (the value before 2022 and 2023 is 970 million yuan and 1.18 billion yuan respectively), maintaining the “buy” investment rating.
Risk tips: the pesticide boom is down, the product price is down, the price of raw materials fluctuates sharply, and the progress and profitability of new projects are lower than expected; The forecast data is only preliminary accounting data, and the specific and accurate financial data shall be subject to the first quarter report of 2022 officially disclosed by the company
