Essence Securities: Gave Guangxin shares a buy rating with a target price of 42.0 yuan

2022-01-20Anxin Securities Co., Ltd. Zhang Wangqiang, Qiao Lu conducted a study on Guangxin shares and released a research report "Q4 performance reached a new high, multi-project orderly construction", this report gave a buy rating to Guangxin shares, believing that its target price is 42.00 yuan, the current stock price is 35.52 yuan, and the expected increase is 18.24%.

Guangxin Shares (603599)

Event: The company released the 2021 performance forecast, and it is expected to achieve a net profit attributable to the mother of 1.45 billion yuan to 1.51 billion yuan in 2021, a year-on-year increase of +146.29% to +156.48%. In the single quarter of 2021Q4, the net profit attributable to the mother is expected to be 417 million yuan to 477 million yuan, +172.1% to +211.3% year-on-year, and +3.6% to +18.5% from the previous quarter.

2021Q4 performance hit a record single-quarter high: in 2021, the industry boom is higher, the prices of major products have risen sharply year-on-year, and the level of profitability has increased significantly year-on-year. According to Zhongnong Lihua, the average price of the company's main products carbendazim, methylthiophenomycete, difloxon and glyphosate in 2021 increased by +17.2%, +21.7%, +12.3% and +125.9% respectively compared with 2020, and the average price of 2021Q4 and Q3 changed by +20.4%, +17.7%, +43.3% and +51.3% respectively, and the average price of o-2-nitrobenzene chloride in 2021 was +275.4% and +92.4% respectively. In January 2022, the price of the company's main varieties remained stable at a high level compared with the end of 2021Q4, and Q1 was the peak season for pesticide exports, and the boom was expected to remain high. As of the end of the third quarter of 2021, the company had more than 5 billion yuan in cash on hand and abundant cash flow. The company's equity incentive target for 2020 is to achieve a net profit of 556 million, 637 million and 758 million yuan from 2020 to 2022, and the target has been exceeded in 2021.

The construction of multiple projects continues to advance, and the new environmental impact assessment will help continue to grow in the future: According to the announcement, in 2021, the company will actively promote production, fully implement the progress of related projects, and continuously improve the layout of the industrial chain to meet the individual needs of customers at home and abroad, and actively expand the upstream and downstream markets. According to the 2021 report, the 200,000 tons of o-(p)nitrochlorinated benzene project has been basically completed, the annual output of 300,000 tons of ionic membrane caustic soda project has entered the end, and the technical transformation project of the heating center, pyrazolozim ester, oxazolazolone and other projects are under construction, and it is expected to be completed and put into operation. As of the end of 2021Q3, the company's construction projects were 673 million yuan, an increase of 316 million yuan from the end of 2020. The company in the hand environmental assessment of many, continue to deepen the phosgene industry chain product layout, according to Guangde City, East to the county government website, the company plans indina, oxalone, cyclazinone, thiazide ketone, p-aminophenol and other project construction, intermediate reserves, new raw drug production line through smooth, new production capacity layout will become the company's continuous profit growth point.

Investment proposal: It is expected that the company's net profit in 2021-2023 will be 1.47 billion, 1.54 billion and 1.67 billion yuan respectively, corresponding to PE11.2, 10.7 and 9.9 times, maintaining the Buy-A rating.

Risk warning: the progress of the project is less than expected, the price of raw materials fluctuates, etc.

A total of 9 institutions have given ratings in the last 90 days, 7 buy ratings and 2 overweight ratings; the average target price of institutions in the past 90 days has been 39.83; the Securities Star Valuation Analysis Tool shows that Guangxin Shares (603599) good company rating is 3 stars, good price rating is 3 stars, and valuation comprehensive rating is 3 stars. (Rating Range: 1 ~ 5 stars, maximum 5 stars)