\u3000\u30 Shenzhen Fountain Corporation(000005) 53 Adama Ltd(000553) )
Event: Andorra released its 2021 annual report, realizing an operating revenue of 31.039 billion yuan, a year-on-year increase of 9.12%; The operating profit was 516 million yuan, a year-on-year decrease of 4.09%; The net profit attributable to shareholders of listed companies was 157 million yuan, a year-on-year decrease of 55.38%, and the net profit after deducting non recurring profits and losses was 78 million yuan, a year-on-year decrease of 72.94%. Based on the total share capital of 2.33 billion shares, the diluted earnings per share was 0.07 yuan (0.03 yuan after deducting non-profit), and the operating cash flow per share was 1.96 yuan. Among them, the operating revenue in the fourth quarter was 8.55 billion yuan, a year-on-year increase of 13.17%; The net profit attributable to the shareholders of the listed company was 161 million yuan, a year-on-year increase of 26.33%; Equivalent to single quarter eps0 07 yuan.
The sales volume and pricing were improved, and the scale of revenue reached a record high, and the rising cost put pressure on the profit margin. In the fourth quarter of 2021, the company’s operating performance was brilliant. Driven by the price and sales volume yoy + 14% / 5% respectively, the sales volume in a single quarter reached US $1.337 billion, a year-on-year increase of US $196 million and yoy + 17%, bringing the annual revenue to a record high. In 2021, the company’s sales volume and price increased yoy + 12% / 4% (in USD) respectively, driving the operating revenue to increase by 2.594 billion yuan (in RMB). By business, the revenue of herbicide business increased by 953 million yuan, the bactericide business increased by 239 million yuan, the pesticide business increased by 1.097 billion yuan, and the fine chemical products business increased by 305 million yuan. Therefore, the fungicide and herbicide business is the main source of the company’s revenue growth. The company’s comprehensive gross profit margin is 24.6%, yoy-4.87pcts; The gross profit was 7.626 billion yuan, a year-on-year decrease of 748 million yuan, and the profit margin was under pressure. In 2021, due to the continuous impact of the epidemic, the global shipping and logistics costs continued to rise and remained high. In addition, due to the rising oil price and rising raw material prices, the company’s raw material procurement cost increased by 1.255 billion yuan year-on-year, yoy + 7.50%.
Period expenses: the sales expenses decreased year on year, and the management / financial expenses remained stable. In 2021, the total period expenses of the company amounted to 7.048 billion yuan, with a year-on-year decrease of 788 million yuan, of which the sales / management / financial expenses were 4.019/10.90/1.939 billion yuan respectively, with a year-on-year change of -926 / + 0.46 / + 92 million yuan, and the corresponding expense rates were 12.95% / 3.51% / 6.25% respectively, with a year-on-year yoy-4.44 / – 0.16 / – 0.24pcts. The obvious decrease in sales expenses is mainly due to the fact that most transportation costs are included in operating costs. The company’s income tax expense was 380 million yuan, a year-on-year increase of 158 million yuan, mainly due to the increase in the sales scale of products in major markets.
The relocation, upgrading and transformation of Jingzhou base have been completed, and the output and capacity utilization rate have increased steadily. Jingzhou production base of the company was officially put into operation in November 2021, and the first batch of acephate projects with an annual output of 30000 tons in the district has entered the trial production stage. Three years ago, the base implemented the old plant operation facility relocation and upgrading project. At present, the output and capacity utilization rate of Jingzhou production base are steadily improving. At the same time, the additional procurement costs incurred due to the shutdown of Jingzhou base will be gradually reduced. In the coming year, the company will continue to focus on promoting the relocation and upgrading project of production facilities in Huai’an base, and continue to strengthen the construction of China’s business and operation capacity.
Profit forecast and Valuation: affected by the rising costs of raw material procurement, logistics and transportation, we expect the net profit of the company to be reduced to RMB 550 700 850 million from 2022 to 2024 (the values before 2022 and 2023 are RMB 880 million and RMB 1.17 billion respectively). The company is a leader in the global non patented crop protection market. Considering the construction of new bases and the future production capacity, the company maintains the “held” 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 and construction bases are lower than expected
