\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 486 Jiangsu Yangnong Chemical Co.Ltd(600486) )
Key investment points
Event: the company released the report for the first quarter of 2022. In 2022q1, the company achieved an operating revenue of 5.27 billion yuan, a year-on-year increase of + 42.0%, a month on month increase of + 102.6%, and a net profit attributable to the parent company of 900 million yuan, a year-on-year increase of + 103.5%, a month on month increase of + 336.7%. The performance of a single quarter hit a record high.
The prices of main products rose year-on-year, and the company’s Q1 performance hit a quarterly high. In the first quarter of 2022, the sales volume of the company’s original drugs and preparations were 28400 and 16900 tons respectively, and the average sales price was 112100 and 55500 yuan respectively, with a year-on-year increase of 41.3% and 77.2%. In the first quarter, the price of pesticide products fell somewhat month on month. The Sino-Agri Leading Biosciences Co.Ltd(603970) technical drug price index fell from 204.3 at the beginning of the year to 161.25 at the end of the first quarter, but it was still at a high level year on year, and there was a certain lag in the price adjustment of the company’s products. On the cost side, although the price of raw materials increased significantly year-on-year in the first quarter, the company, as the only enterprise supporting the whole pyrethroid industry chain in China, has a strong ability to resist the risk of raw material price fluctuation. In the first quarter, the company achieved a gross profit margin of 29.8%, an increase of 7.4 percentage points month on month.
Youjia phase IV project was put into operation in phase I, and its performance contribution is worth looking forward to. The total investment of the company’s Youjia phase IV (Sinochem modern plant protection Industrial Park Phase II) project is 1.94 billion yuan. The first phase of the project has been completed in December 2021 and has entered commissioning and production. The products include 3800 tons of bifenthrin, 6000 tons of nitrosulfuron, 3000 tons of Difenoconazole and 1000 tons of haloperidol. The annual performance contribution of Youjia phase IV is worth looking forward to. According to the EIA information, the remaining products of Youjia phase IV include 3000 tons of Kungfu pyrethrin, 510 tons of sanitary pyrethrin, 2000 tons of propiconazole, 1000 tons of loudiurea, 200 tons of hydroxypiperin and 500 tons of synergist, which are expected to be completed by the end of 2022, helping the company’s performance to grow continuously.
Rely on international agrochemical giants to accelerate the penetration of globalization. In July, 2021, the company transferred 36% of the shares of Zhengda Group and became the controlling shareholder of Zhengda Group. In November 2021, the company exclusively authorized Syngenta and its local companies to represent the company’s sales business in India, the Philippines and Thailand. In the future, with the help of Sinochem and Syngenta’s overseas marketing resources, the company will further expand its overseas market and increase its global market share.
Profit forecast and investment suggestions. It is estimated that the company’s EPS from 2022 to 2024 will be 6.71 yuan, 7.25 yuan and 8.09 yuan respectively. The company is a benchmark enterprise in China’s agrochemical industry. Youjia phase IV Project will drive the performance in 2022. Relying on international agrochemical giants, the company has strong certainty of future growth. We give the company 22 times PE in 2022, corresponding to the target price of 147.62 yuan, and give a “buy” rating for the first time.
Risk warning: the project under construction is not put into operation as expected, the price of raw materials rises sharply, and the price of main products fluctuates.
