\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 486 Jiangsu Yangnong Chemical Co.Ltd(600486) )
Event:
On April 25, 2022, the company released the first quarterly report of 2022: in Q1, 2022, the company realized an operating revenue of 5.268 billion yuan, a year-on-year increase of + 42.1% and a month on month increase of + 102.6%; The net profit attributable to the parent company was 904 million yuan, a year-on-year increase of + 103.5% and a month on month increase of + 337.9%. The return on net assets was 12.2%, up 5.0 PCT year-on-year and 9.2 percentage points month on month; The gross profit margin of sales was 29.8%, up 6.3 PCT year-on-year and 7.4 PCT month on month; The net profit margin on sales was 17.2%, up 5.2 PCT year-on-year and 9.2 PCT month on month. The basic earnings per share is 2.92 yuan / share.
Key investment points:
The volume and price of pesticide products rose simultaneously, and the performance of the company increased rapidly in the first quarter
In the first quarter of 2022, the company realized an operating revenue of 5.268 billion yuan, a year-on-year increase of + 42.1% and a month on month increase of + 102.6%; The net profit attributable to the parent company was 904 million yuan, a year-on-year increase of + 103.5% and a month on month increase of + 337.9%. In terms of product segment, the original drug business of 2022q1 company achieved a revenue of 3.188 billion yuan, a sales volume of 28445 tons, and the average sales price was 112100 yuan / ton, a year-on-year increase of + 41.26%; The preparation business achieved a revenue of 939 million yuan, a sales volume of 13905 tons, and the average sales price was 55500 yuan / ton, a year-on-year increase of + 77.21%.
The company’s revenue scale and net profit attributable to the parent company have achieved rapid growth. On the one hand, during the reporting period, Youjia phase III project reached full production, and the first phase of phase IV project was completed and put into operation, adding 6000 tons of nitrosulfuron, 3800 tons of bifenthrin, 3000 tons of Difenoconazole and 1000 tons of haloperidol. The company’s production capacity and output increased significantly compared with the same period of the previous year. At the same time, the prices of the company’s main pesticide products increased over the same period of last year. In 2022q1, although the prices of main pesticide products fell, they improved significantly year-on-year. According to Sino-Agri Leading Biosciences Co.Ltd(603970) data, the average market prices of the main pesticide products of 2021q1 company: Kungfu pyrethrin, bifenthrin and cypermethrin were 23.6, 33.7 and 92000 yuan / ton respectively, with a year-on-year increase of 21% / 49% / 3% respectively; Main herbicide products: glyphosate, dicamba and nitrosulfuron were priced at 75000 yuan / ton, 77000 yuan / ton, up 151%, 1% and 4% year-on-year respectively; Main fungicide products: the average market prices of Difenoconazole, propiconazole, haloperidol and pyrazole mycoester were 19.6, 20.9, 29.0 and 259000 yuan / ton respectively, with a year-on-year increase of 4%, 73%, 16% and 65% respectively. The second quarter is the peak season of pesticide demand. With the increase of downstream drug demand and further clearing of industrial inventory, it is expected that the market price of pesticide products is expected to stop falling and maintain stability compared with the first quarter.
On the other hand, the expense rate of the company during the period was well controlled. The sales / management / financial expense rate of the company in 2022q1 was 1.7% / 5.9% / 0.1% respectively, with a year-on-year increase of + 0.2 / – 0.2 / + 0.5 PCT and a month-on-month increase of – 1.5 / – 4.5 / – 2.6 PCT. In Q1 2022, the net cash inflow from operating activities of the company was 790 million yuan, with a year-on-year increase of 320 million yuan or 69.5%.
We are optimistic about the continuous development of Youjia phase IV Project and the prominent enabling advantages of the group
In the first phase of Youjia phase IV, 6000 tons of nitrosulfuron, 3800 tons of bifenthrin, 3000 tons of Difenoconazole and 1000 tons of haloperidol have been put into trial production in 2022. The remaining 3510 tons of pyrethroids, 2000 tons of propiconazole and 500 tons of intermediates are expected to be completed by the end of this year. After the completion of Youjia phase IV project, the average annual income is expected to increase by 2.99 billion yuan, and the after tax financial internal rate of return is 19.13%. We are optimistic about the continuous improvement of the company’s performance brought by the gradual release of production capacity of Youjia phase IV project to ensure the medium-term growth of the company. In June 2021, the company plans to invest 10 billion yuan to build a large-scale fine chemical project in Huludao. It is expected that the investment of the project is similar to that of Youjia project. The investment and construction will be carried out by stages to open up the long-term growth space of the company.
In addition, Syngenta group, the controlling shareholder of the company, plans to be listed. The company is expected to benefit from the resource sharing dividend and coordinated operation advantages within the group, improve the integration ability of the whole industrial chain, and bring continuous large business order increment.
The profit forecast and investment rating are based on the increase in production and sales brought by the full operation of Youjia phase III and the gradual completion of Youjia phase IV, as well as the rise in the price of agrochemical products. We expect that the net profit attributable to the parent company in 2022, 2023 and 2024 will be RMB 2.343 billion, RMB 2.595 billion and RMB 2.876 billion respectively, and the EPS will be RMB 7.56, 8.37 and 9.28/share, corresponding to 15, 14 and 12 times of PE, maintaining the “buy” rating.
It is more difficult for the company to coordinate the risk of epidemic situation, environmental protection and production of raw materials, and increase the risk of failure to meet the expectation of the company’s production, and the risk of product safety.
