\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 486 Jiangsu Yangnong Chemical Co.Ltd(600486) )
Core view
In 2022q1, the single quarter performance increased by 104%, and continued to maintain a steady, sustained and healthy development momentum. The company released the first quarter report of 2022: benefiting from the company’s full production of Youjia phase III project, the first phase of phase IV project was completed and put into operation, the production capacity and output increased compared with the same period of last year, and the price of main pesticide products (such as pyrethroids, glyphosate, preparation products, etc.) increased compared with the same period of last year. In the single quarter of 2022q1, the company realized an operating revenue of 5.268 billion yuan, a year-on-year increase of 42.08%; The net profit was 904 million yuan, a year-on-year increase of 103.51%, the highest profit level in a single quarter in the company’s history. The company’s performance is very bright, significantly exceeding our expectations. In the future, the company will maintain a steady, sustained and healthy development momentum and build itself into a global agrochemical giant.
The strong integrated operation ability of research, production and marketing has improved the market competitiveness of the company. In recent years, the company has continuously deepened the strategic cooperation with peers, leading preparations and agrochemical multinational enterprises to expand the sales of core varieties; And adjust the product sales model according to market changes, accurately implement the price adjustment strategy, and improve the profitability of products. At present, the company has the leading pesticide R & D capacity in China, the production and manufacturing of many kinds of pesticides and the ability of safety and environmental protection. It has a wide range of original drugs and preparations sales channels and markets. At the same time, the company’s supporting advantages of industrial chain integration help the company stabilize the risk of raw material price fluctuation. In Q1 2022, the average selling price per ton of the company’s original medicine and preparation products was 112100 yuan / ton and 55500 yuan / ton respectively, with a year-on-year increase of 41.26% and 77.21% respectively; The sales volume of the two reached 28400 tons and 16900 tons respectively; The operating revenue reached 3.188 billion yuan and 939 million yuan respectively.
Focus on promoting the construction of Youjia phase IV Project and deepen cooperation with Syngenta. The company has efficiently completed the construction of phase I project of Youjia phase IV (the products involve Difenoconazole, nitrosulfuron, bifenthrin and haloperidol). We expect that the volume of phase IV Project will make a positive contribution to the company’s performance in 2022; Shenyang Kechuang has implemented a number of engineering and technological transformation throughout the year, and the production capacity of Youke plant protection preparations continues to increase. In addition, Syngenta has become the controlling shareholder of the company in 2021. We are optimistic that Syngenta’s integration will accelerate Jiangsu Yangnong Chemical Co.Ltd(600486) undertaking its order transfer in the future, which will be conducive to the economy, stability and security of Syngenta’s raw material supply chain; With the help of Syngenta brand and sales channels, Jiangsu Yangnong Chemical Co.Ltd(600486) global market share is expected to increase.
Risk warning: price fluctuation of raw materials; Downstream demand is lower than expected; The progress of projects under construction is less than expected.
Investment suggestion: in the future, the company will continue to layout new projects, deepen the integration of research, production and marketing, operate efficiently, and promote the sustainable and high-quality development of the enterprise in an all-round way. We are optimistic that the company will become an international comprehensive agrochemical giant. On the basis that the performance of 2022q1 significantly exceeded the expectation, we raised the company’s profit forecast. We expect the net profit attributable to the parent company from 2022 to 2024 to be RMB 2.211/25.83/2.877 billion respectively, with a year-on-year growth rate of 80.9% / 16.8% / 11.4%; Diluted EPS = 7.13/8.33/9.28 yuan, corresponding PE = 16.1/13.8/12.4x under the current share price. Maintain the “buy” rating.
