\u3000\u3 China Vanke Co.Ltd(000002) 734 Limin Group Co.Ltd(002734) )
The rise of raw materials has put pressure on the gross profit margin, and there will still be new production capacity in the future. The “buy” rating will be maintained. In 2021 and 2022 Q1, the company achieved operating revenue of RMB 4.738 billion and 1.246 billion respectively, with a year-on-year increase of + 7.97% and – 2.54% respectively; The net profit attributable to the parent company was 307 million yuan and 97 million yuan respectively, with a year-on-year increase of – 20.49% and – 39.58% respectively. Since 2021, the cost of raw materials of the company has continued to rise, and the gross profit margin of products has been under pressure. We lowered the profit forecast for 20222023 and added a new profit forecast for 2024. It is estimated that the net profit attributable to the parent company in 20222024 will be RMB 484 (- 1.32), RMB 604 (- 0.70) and RMB 667 million respectively, and the EPS will be RMB 130 (- 0.35), RMB 1.62 (- 0.19) and RMB 1.79 respectively. The corresponding PE of the current stock price is 7.3, 5.8 and 5.3 times respectively. At present, the global attention to food security supply has increased, which makes the global market scale of crop protection products including pesticide products continue to increase. As the leader of pesticides, the company’s production capacity continues to expand and is expected to fully benefit in the future, maintaining the “buy” rating.
Crude oil and coal continued to rise, the raw materials of the company’s products rose, and the gross profit margin was under pressure
According to wind data, the prices of WTI and Brent crude oil have continued to rise since 2021, and have remained above US $100 / barrel since 2022, further pushing up the cost of pesticide raw materials and product prices. According to the company’s annual report, the raw material cost of the company’s pesticide business increased by 14.09% year-on-year, further pushing up the company’s pesticide sales price. In 2021, the company’s 500 tons of Difenoconazole, 500 tons of methotrexate and 10000 tons of Daisen series products were put into production, and the capacity scale was further expanded. We believe that with the continuous rise of global crop prices, the gross profit margin of technical drugs is expected to be further repaired in the future. At that time, the company is expected to benefit from the simultaneous rise of volume and price.
Pay attention to the construction progress of the company’s 5000 ton glufosinate project and be optimistic about the long-term growth of the company
According to the company’s announcement, Weiyuan biochemical, a subsidiary of the company, is building a 5000 ton glyphosate project, which is expected to be completed within 2022, contributing to the increase of performance. According to Zhuo Chuang information data, at present, glufosinate has entered the peak season, and the price is 225000 yuan / ton, which is at an all-time high. At present, the company has a production capacity of 1500 tons of glufosinate. In the future, with the production of new production capacity, the cost of glufosinate is expected to further decline and the profitability will be greatly improved. In addition, the subsidiary xinweiyuan is building a new green biological product manufacturing project, which is expected to form a 500 ton biological fermentation capacity in the future. The technical transformation project of aluminum triethylphosphonate with an annual output of 12000 tons has entered trial production, which will further contribute to the increase of performance and be firmly optimistic about the long-term growth of the company.
Risk tips: the construction progress of the project is less than expected, the product price has fallen sharply, the macro-economy has declined, etc.
