\u3000\u3 Shengda Resources Co.Ltd(000603) 639 Hailir Pesticides And Chemicals Group Co.Ltd(603639) )
Performance review
On April 25, the company released its 2021 annual report and the first quarterly report of 2022. The company achieved an operating revenue of 3.699 billion in 2021, a year-on-year increase of + 14.62%; The net profit attributable to the parent company was 450 million yuan, a year-on-year increase of + 10.59%. In the first quarter of 2022, the company realized an operating revenue of 1.2 billion yuan, a year-on-year increase of + 6.57%, and a net profit attributable to the parent company of 142 million yuan, a year-on-year increase of + 8.9%. The performance was in line with expectations.
Business analysis
Product prices fell back to a rational level. In terms of product price, the current quotation of insecticide imidacloprid is 160000 yuan / ton and acetamiprid is 160000 yuan / ton. Due to the double control price increase of energy consumption in the third quarter of last year, the prices of the two have fallen back to the rational price, which are located in the historical 47% and 27% respectively. The main product of fungicide, pyrazole ether mycoester, is 248000 yuan / ton. Due to the double control price increase of energy consumption in the third quarter of last year, it has fallen back to the rational price, which is at the historical 48th percentile. The price of the fungicide thiabendazole is about 500000 yuan / ton. At present, the competition pattern in China is relatively stable. We believe that the company has certain competitiveness in the above products, and the overall profit remains stable.
New projects have been gradually implemented, and the company’s performance has reached a new level. In April 2020, the company invested about 2 billion yuan to build hengning phase I technical drugs and intermediates project. According to the disclosure of the annual report, hengning phase I project is expected to be completed in the first half of 2022. We calculate that hengning phase I project will bring 1.71 billion yuan to the company after it is fully put into operation from 2022 to 2023; In April 2021, the company started the construction of hengning phase II project. We calculated that after the phase II project is fully completed, it will contribute 5.886 billion yuan of revenue to the company (including 3.3 billion yuan of revenue from the full production of 8000 tons of propionazole).
Investment advice
At present, the company’s product prices are somewhat lower than those in the third and fourth quarters of the year, but there is still a certain persistence at the high level. From 2022 to 2023, we benefit from the growth brought by the operation of new projects. We expect the company’s net profit attributable to the parent company from 2022 to 2024 to be 621 million yuan (- 12.7%), 765 million yuan (- 13%) and 881 million yuan (newly introduced) respectively; EPS is 1.81 yuan, 2.25 yuan and 2.59 yuan respectively. The current market value corresponding to PE is 10.95x/8.90x/7.72x, maintaining the “overweight” rating.
Risk tips
The construction progress of the project is less than expected; The price of pesticide products fell; Demand for pesticides fell.
