\u3000\u3000 Shandong Weifang Rainbow Chemical Co.Ltd(301035) (301035)
Event: Shandong Weifang Rainbow Chemical Co.Ltd(301035) released the performance forecast for 2021. It is estimated that the net profit attributable to the parent company will be RMB 700 ~ 850 million in 2021, with a year-on-year increase of 59.95% - 94.23%. It is estimated that the net profit after deducting non-profit is RMB 695-870 million, with a year-on-year increase of 58.57% - 96.50%. Among them, the net profit attributable to the parent company is expected to be RMB 250-400 million in the fourth quarter of 2021 (RMB 175 million in the third quarter), which was only RMB 9.08 million in the same period last year.
The advantages of the company's "light structure, rapid response" mode appeared, and the performance in the fourth quarter exceeded expectations
In 2021, facing the negative impact of the market environment that the global shipping cost soared to an all-time high and the rapid rise in the cost and price of herbicides (glyphosate, glufosinate, etc.), the company gave full play to its operational advantages of "light structure and rapid response", actively took countermeasures, and finally realized the rapid growth of annual performance, of which the performance in the fourth quarter exceeded the expected growth. On the one hand, the growth of global demand for pesticide products has promoted the sales and prices of the company's main products (about 98% of the company's revenue in 2020 came from abroad); On the other hand, the company continued to increase the number of pesticide self-service registration certificates in existing target countries, carried out new market expansion, and achieved a zero breakthrough in registration certificates in Russia, India and other countries. From the single quarter of the fourth quarter, we speculate that the company flexibly grasped the market rhythm and increased its inventory by about 200 million yuan to 1.53 billion yuan month on month in the third quarter. It is expected to form good sales in the fourth quarter and convert it into considerable profits, reflecting the company's strong ability to capture opportunities under the global multi contact business model.
The pesticide industry enjoyed a good boom in 2021, especially since the fourth quarter
In 2021, the overseas epidemic continued to repeatedly bring worries about global food security, the bulk Shenzhen Agricultural Products Group Co.Ltd(000061) demand was strong, the price was high, and the farmers' planting income increased. This has led to an increase in farmers' investment in crop protection products and a strong demand for pesticides and other products. Driven by overseas demand, combined with the supply constraints caused by phased power restrictions in some parts of China in the fourth quarter, the prices of most pesticide products in China have risen rapidly since the fourth quarter of 2021, and the industry boom has further risen.
The strategic planning has been steadily promoted, focusing on advanced manufacturing supported by the improvement of global marketing network and R & D innovation
According to the company's medium-term strategic plan for 2020-2024, the company will continue to build its own brand team in more target countries and carry out B-C business locally. Since the fourth quarter, the company has established companies in Peru, Zambia, Algeria and Uzbekistan to actively carry out independent registration of pesticide products and develop local pesticide market sales business. At the same time, the company actively arranges the advanced manufacturing of single products of important active components (7 have passed the patent period and 3 are about to pass the patent period), which will achieve greater production capacity and more varieties of technical support, further strengthen the company's complete industrial chain and support the expansion of the company's global market.
Profit forecast and Valuation: combined with the change of pesticide price trend, the net profit of the company from 2021 to 2023 is increased to RMB 770 million, RMB 970 million and RMB 1.18 billion respectively (the previous value is RMB 610 million, RMB 790 million and RMB 980 million respectively); In combination with the company's performance growth and business development, it was raised to the "buy" rating (the previous rating was "overweight").
Risk warning: the performance forecast is the preliminary calculation result, and the specific financial data shall be subject to the company's disclosure announcement. The environmental protection risk, the risk of policy change of major pesticide importing countries, the risk of exchange rate change, the risk of product export tax rebate policy change, and the risk of price fluctuation of major raw materials
