\u3000\u3 China Vanke Co.Ltd(000002) 258 Lier Chemical Co.Ltd(002258) )
Event:
On April 26, 2022, the company released the first quarterly report of 2022: in Q1, 2022, the company realized an operating revenue of 2.613 billion yuan, a year-on-year increase of + 76.3% and a month on month increase of + 18.0%; The net profit attributable to the parent company was 534 million yuan, a year-on-year increase of + 142.0% and a month on month increase of + 16.0%. The return on net assets was 10.4%, with a year-on-year increase of 5.0pct and a month on month increase of 0.7pct; The gross profit margin of 6pct increased by 34.5% year on year; The net profit margin of sales was 22.6%, with a year-on-year increase of 6.1pct and a month on month decrease of 0.4pct. The basic earnings per share is 1.01 yuan / share.
Key investment points:
The volume and price of pesticide products rose simultaneously, and the company's performance in the first quarter was beautiful
In Q1 2022, the company achieved an operating revenue of 2.613 billion yuan, a year-on-year increase of + 76.3% and a month on month increase of + 18.0%; The net profit attributable to the parent company was 534 million yuan, a year-on-year increase of + 142.0% and a month on month increase of + 16.0%. On the one hand, we believe that we have benefited from the continuous and stable production brought about by the engineering improvement of methyl phosphorus dichloride project in Guang'an base, and the completion of the technological transformation of glufosinate and fomesafen, which has increased the production and sales of the company's products; On the other hand, the market price of glyphosate improved significantly year-on-year. In Q1 2022, the average market price of glyphosate was 256900 yuan / ton. Although it fell month on month, it increased by 45% year-on-year. Since the beginning of March, with the warmer weather and the increase of downstream planting activities, the inventory of glufosinate industry has been removed. As of April 22, the industrial inventory was 690 tons, down 20% from the high point of industrial inventory in early March. The start-up time of glyphosate price recovery lags about one month. According to Baichuan Yingfu, as of April 26, the market price of glyphosate was 215000 yuan / ton, up 23% from the market trough at the end of March. The second quarter is the peak demand season for traditional pesticides. We expect that the price rise trend of glufosinate is expected to rise steadily and further thicken the company's profits.
In terms of period expense rate, the sales / management / financial expense rate of Q1 company in 2022 was 1.2% / 5.3% / 0.9% respectively, with a year-on-year rate of - 0.2 / - 1.6 / - 0.1pct and a month on month rate of + 0.3 / - 4.3 / - 0.5pct respectively. The net cash flow from operating activities was 200 million yuan, a year-on-year increase of 170.2%.
Be optimistic about the long-term track of glufosinate, innovate the layout and win new growth for l-glufosinate
As a substitute for paraquat and glyphosate, with the prominent problem of glyphosate resistance and the continuous expansion of paraquat prohibition, the growth space of glyphosate can be expected. At the same time, the production process of glufosinate involves explosive, highly toxic and difficult to deal with pollutants. The technical barriers are high and there are few truly capable production enterprises. We judge that the profitability in the future is high. At present, the company is developing a series of new products including l-glufosinate, oxazolin oxalate and chlorfenoxamide to provide projects and technical reserves for long-term development. The herbicidal activity of l-glufosinate is twice that of ordinary glufosinate, and its development and production will significantly reduce the dosage of technical drugs. The company plans to build 3000t / a l-glufosinate in Guang'an base and 30000 T / a l-glufosinate in Mianyang base. According to the company's 2021 annual report, the production capacity of Guang'an base is in the trial production stage and is expected to be put into operation in 2022. In addition, the methyl phosphorus dichloride project in Guang'an base has been in normal trial operation, which will increase the company's new profit growth point in the future.
As a leading enterprise of glufosinate, the profit forecast and investment rating company will benefit from the increase of alternative demand and the superposition of the new production capacity of Guang'an base and Mianyang base. Its performance is expected to continue to grow and is optimistic about the long-term development of the company. We expect the net profit attributable to the parent company in 2022, 2023 and 2024 to be 1.350, 1.556 and 1.829 billion yuan respectively, and EPS to be 2.56, 2.95 and 3.47 yuan / share. The corresponding PE is 8, 7 and 6 times. It is covered for the first time and given a "buy" rating.
The risks suggest that China's epidemic situation is spreading, new projects are put into operation less than expected, the risk of sharp rise in raw material prices, the risk of decline in the price of main products, the risk of accidents in safety production, environmental protection risk, international trade friction and rising tariffs.
