Hebang’s businesses of Glyphosate and PMIDA have a higher percentage of profit, and there is still room for expansion

Recently, the media has been analyzed on the Glyphosate and PMIDA business of Hebang. As a leading enterprise in the domestic PMIDA industry, and Hebang still has a larger space for expansion.

Q: In 2022, Hebang achieved sales revenue of ¥13.039 billion, with a year-on-year growth of 30.55%. Net profit reached 3.807 billion yuan, up 26.12% year on year. But the company's share price did not perform well after the release of the annual report, why?

Although Hebang has completed its layout in the three fields of chemical industry, agriculture and photovoltaic, the product that accounts for a high proportion of the company's main business income and profit is still Glyphosate/PMIDA. At present, the price-earnings ratio of the same industry listed companies with Glyphosate as the main business, such as Xingfa and Wynca, is less than 6 times, which also limits the valuation space of Hebang.

In addition, if the net profit of Hebang is further divided, the net profit of the company in the first quarter to the fourth quarter of 2022 is ¥1.043 billion, ¥1.592 billion, ¥793 million and ¥379 million respectively, while the net profit of the company in four quarters of 2021 is ¥251 million, ¥663 million, ¥1.099 billion and ¥1.005 billion respectively. It can be seen that the net profit of the company in the fourth quarter of 2022 declined significantly year-on-year and quarter-on-quarter, which is also the main reason for the low valuation of the company.

One of the main reasons for the obvious decline in the net profit of Hebang in the fourth quarter is the decline in the price of Glyphosate. In 2021, the price of Glyphosate rose all the way from about ¥28,000 to ¥81,000, but in 2022, it fell from ¥81,000 to about ¥41,800 at present. The decline was particularly marked in the second half of 2022, which was the main reason for the company's poor fourth quarter results. Fortunately, the price of Sodium Carbonate, the company's other main product, remained relatively stable in 2022, stabilizing the company's performance.

In addition to PMIDA, the company now has a certain cost advantage in the industry, relying on its own reserves of 90.91 million tons of phosphate resources, 98 million tons of salt resources and natural gas supply advantages in Southwest China. At the same time, the company's annual production of 8GW photovoltaic packaging materials and products project has gradually begun to put into production and become solid. and Fuxing’s annual production of 10GW N+ type ultra-efficient single crystal solar wafers project has produced qualified products and sold them to the public. The above new projects will gradually release profits in 2023, to make up for the shortage of Glyphosate price decline to some extent.