\u3000\u3 Shengda Resources Co.Ltd(000603) 639 Hailir Pesticides And Chemicals Group Co.Ltd(603639) )
Event 1: on the evening of April 25, the company released its annual report for 2021. In 2021, the company achieved a revenue of 3.699 billion yuan, 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%. Among them, 2021q4 company achieved a revenue of 1.116 billion yuan, a year-on-year increase of + 70.30% and a month on month increase of + 78.80%; The net profit attributable to the parent company was 139 million yuan, a year-on-year increase of + 88.19% and a month on month increase of + 67.82%.
Event 2: on the evening of April 25, the company released the first quarter report of 2022. In the first quarter of 2022, the company achieved a revenue of 1.2 billion yuan, a year-on-year increase of + 6.57% and a month on month increase of + 7.54%; The net profit attributable to the parent company was 143 million yuan, a year-on-year increase of + 8.94% and a month on month increase of + 2.87%.
The sales volume of pesticides increased in 21 years, the price of 22q1 pesticides rebounded, and the company’s performance increased steadily. In 2021, the company continued to expand sales channels and strengthen sales services to ensure the growth of product sales. Among them, the sales volume of pesticides was 46400 tons, with a year-on-year increase of 14.64%; The sales volume of fertilizer was 4800 tons, with a year-on-year increase of 37.45%. In 2021, the prices of main raw materials fluctuated significantly. The prices of acrylonitrile, dimethylformamide, toluene, fine monomethylamine and liquid chlorine increased by 65.3%, 112.3%, 47.2%, 21.7% and 34.9% respectively. Under the background of substantial increase in raw material cost, the company adopted centralized procurement, continuously optimized supply and transportation channels, technological transformation and upgrading and large-scale advantages, effectively controlled the cost, and the overall gross profit margin of the company remained relatively stable in 2021. In Q1 2022, supported by the cost of sectorau materials, the prices of pesticides and fertilizers of the company increased significantly, with the prices of pesticides and fertilizers increased by 41.9% and 24.0% respectively year-on-year. Although the pesticide sales volume of 22q1 company has declined, the pesticide business revenue of 22q1 company still increased by 7.3% year-on-year under the strong support of product prices.
The release of production capacity enhances the advantages of scale, and the promotion of projects opens up room for growth. By the end of 2021, the company has a pesticide production capacity of 68400 tons, with a capacity utilization rate of 70%. The subsidiary Qingdao hengning is building 40000 tons / year of agricultural chemical raw materials, including insecticide butyl ether urea technical drug, bromofenitrile technical drug, fungicide phenanthrazole technical drug and propiconazole technical drug products. The construction is expected to be completed in the first half of 2022. Meanwhile, hengning phase II project has also been officially launched, which will further expand production capacity. In addition, the company’s subsidiary Qingdao Otis is building 20000 tons of agrochemical preparation and fertilizer manufacturing and 50000 tons of agrochemical preparation and fertilizer manufacturing, which are expected to be completed in 2022 and 2024 respectively. In addition, the company continues to carry out the technical transformation and upgrading of preparation factories and technical drug factories, strengthen the application and replacement of new equipment, and continuously improve productivity. After the projects under construction are put into operation, the production scale of the company is expected to reach a new level, further increase the scale advantage, and continuously optimize the product structure to further enhance the market competitiveness.
Profit forecast, valuation and rating: the company’s pesticide sales increased significantly in 21 years, but the company’s performance in 21 years was slightly lower than expected due to the impact of raw material cost. Considering that the current raw material cost is still at a high level, we lowered the company’s profit forecast for 22-23 years and added a 24-year profit forecast. It is estimated that the net profit attributable to the parent company in 22-24 years will be 6.03 (down 9.5%) / 8.04 (down 7.1%) / 991 million yuan respectively. With the orderly development of hengning project and Otis project, the company still has good development potential and maintains the “overweight” rating.
Risk tip: the price of products and raw materials fluctuates, the capacity construction is less than expected, and the downstream demand is less than expected.
