\u3000\u30 Beijing Jingyeda Technology Co.Ltd(003005) 75 Jiangsu Flag Chemical Industry Co.Ltd(300575) )
Event: the company released the first quarter report of 2022. In 2022q1, the company achieved a revenue of 697 million yuan, a year-on-year increase of + 41.22%, and a net profit attributable to the parent company of 108 million yuan, a year-on-year increase of + 80.70%, with a weighted average roe of 6.5% 34%, the company's first quarter performance exceeded expectations.
The agrochemical market outside China is booming, the rise of upstream raw materials is slowing down, the company's profits are gradually repaired, and the profits in a single quarter hit a record high. The gross profit margin of the company's 2022q1 sales was 26.89%, with a year-on-year increase of 3.12 percentage points, and the net profit margin was 15.72%, with a year-on-year increase of 3.5 percentage points. We expect that it is due to the high boom of China's foreign agrochemical market and the rise of the company's product prices; The net operating cash flow was 127 million yuan, a year-on-year increase of + 386.33%, mainly due to the increase in the return of sales payment and the decrease in the production and preparation at the end of the previous year and the payment of raw materials in the current period; The net cash flow from investment activities was -186 million yuan, a year-on-year increase of + 1798148%, mainly due to the increase in investment in new projects; The construction in progress was 676 million yuan, a year-on-year increase of + 30.52%, mainly due to the increase of new projects in Huaibei base; The agrochemical market outside China is booming, the rise of upstream raw materials is slowing down, the company's profits are gradually repaired, the single quarter profit hit a record high, and the company's performance in the first quarter exceeded expectations. Build the third production base in Huaibei, and rich project reserves have laid the foundation for the sustainable growth of the company in the future. The company invested about 2 billion yuan in Huaibei base to build 15500 tons of new pesticide technical drugs, including 9 non patent technical drugs and 1 self-developed new pesticide. Among them, nine technical drug varieties are products with rapid growth in downstream market demand and less or no supply in China. The construction of the new base began in early 2021. According to the feasibility analysis report of the company, the revenue of Huaibei project is expected to be 4.1 billion yuan after its completion. In addition, the projects of Cyhalothrin and anti inversion ester in Nanjing base and Huai'an base are also continuously promoted, and the rich project reserves lay the foundation for the company's sustainable growth in the future.
Rich pipeline echelons of new products have opened the growth ceiling of traditional pesticide industry. At present, the company has developed and used more than 600 pesticide technical drugs, obtained more than 100 pesticide registration certificates and more than 50 production license / approval certificates in China, and has a rich variety of reserves. Based on the existing technology accumulation, the company tries to enter the field of green new pesticides with independent intellectual property rights with good activity and market prospects. Among the new pesticide products under research, there are 3 pilot products, 5 pilot products and 3 field test products. There are rich echelons of new product R & D pipelines, opening the growth ceiling of the traditional pesticide industry.
Profit forecast and investment suggestions: we expect the net profit attributable to the parent company from 2022 to 2024 to be 367 / 458 / 562 million yuan, 71.6% / 25.0% / 22.7% year-on-year, and EPS to be 1.77, 2.21 and 2.72 yuan respectively. At present, the PE valuation corresponding to the stock price is 14.1 / 11.3 / 9.2 times respectively, maintaining the "buy" rating.
Risk warning: the construction progress of the new project is not as expected, the price of raw materials fluctuates sharply, the risk of safe production and the risk of sharp fluctuation of exchange rate.
