\u3000\u30 Shenzhen Fountain Corporation(000005) 53 Adama Ltd(000553) )
Event: on the evening of April 27, the company released the first quarter report of 2022. In Q1 2022, the company achieved a revenue of 9.016 billion yuan, an increase of 25.45% year-on-year and 5.45% month on month; The net profit attributable to the parent company was 428 million yuan, a year-on-year increase of 187.43% and a month on month increase of 165.11%.
Comments:
The volume and price of plant protection products rose at the same time, and the Q1 revenue reached a record high in 2022. In 2022, the sales volume of Q1 company increased by about 14% and the product price increased by about 18%. Thanks to the simultaneous rise in the volume and price of plant protection products, the company's revenue increased steadily year-on-year, and the revenue in a single quarter hit a record high. Since the beginning of 2022, due to the escalation of geopolitical conflict between Russia and Ukraine, the instability of global food supply has further intensified, which has further increased the attention of countries to ensuring food security, and Shenzhen Agricultural Products Group Co.Ltd(000061) prices have further increased, which has increased farmers' planting willingness and increased the market demand for plant protection products. At the same time, benefiting from the rise of the company's product prices and the correction of some raw material prices, the gross profit margin of Q1 company rebounded in 2022, an increase of about 1.33pct compared with the whole year of 2021. In addition, at the end of 2021, the company's Jingzhou base was able to resume production after a three-year old plant operation facility relocation and upgrading project, which reduced the additional procurement cost caused by the company's insufficient supply capacity. In addition, the company began to stop accruing the shutdown loss of Jingzhou base in 2022q1, which had a positive impact on the company's profit level.
The markets of China, North America and Latin America performed prominently and continued high growth. In Q1 2022, the company performed well in China, North America and Latin America. On the premise of dollar measurement, the sales of the three regions increased by 90.6%, 50.4% and 32.5% respectively year-on-year. In the Chinese market, due to the impact of covid-19 epidemic, the supply of relevant fine chemical products contracted. However, the market demand for relevant products is still strong, which is conducive to the company to raise prices and obtain higher returns. In addition, andor MacPherson, previously acquired by the company, also showed excellent performance in Q1 2022. In the North American and Latin American markets, thanks to the promotion of the peak planting season of soybean, corn and other crops in the local market, the demand for plant protection products has expanded, and the product price has increased, thus realizing a significant increase in sales. At the same time, the company's differentiated products and consumer and professional solutions business also have good performance in the local market.
Profit forecast, valuation and rating: benefiting from the simultaneous rise in the volume and price of plant protection products, the company's Q1 revenue in 2022 reached a record high and the performance exceeded expectations. We raised the company's profit forecast from 2022 to 2024. It is estimated that the net profit attributable to the parent company from 2022 to 2024 will be 9.14 (up 60.4%) / 10.77 (up 41.9%) / 12.49 (up 44.4%) billion yuan respectively. In the context of the high prosperity of the agrochemical industry, the operation of the company will continue to develop well and still maintain the "buy" rating of the company.
Risk tip: raw materials and transportation costs fluctuate, downstream demand is less than expected, capacity recovery is less than expected, and environmental protection and safety production risks.
