China丨Guoguang: Persist in innovation in PGR and water-soluble fertilizers

On Sep. 19, 2022, Guoguang announced that the company held a performance briefing on September 16, and investors asked some questions online.

The detailed contents are as follows:

Q: Could you tell us the company's long-term goals? Have you ever imaged that the company will be the top company?

A: The development strategy of our company is to persist in innovation and development in the agrochemical industry, especially in the field of Plant growth regulators and Water-soluble fertilizers, and strive to become the industry leader in terms of quality, net profit and market share. Of course, while doing well in the domestic market, we also will expand the overseas market and participate in the international competition to become a world-renowned professional manufacturer of Plant growth regulators and Water-soluble fertilizers.

Q: What are the main obstacles to expanding sales of your products?

A: Currently, the main obstacle is that users are scattered, and good technologies and solutions are extremely difficult to deliver to users efficiently.

Q: According to the data, the price of technicals in the third quarter has decreased compared with the previous quarters. So, will the price of the company's products also be reduced?
A: Yes, a few days ago, raw materials increased substantially. But, we did not fully pass the pressure to the end users, resulting in a decline in gross profit levels. At present, the raw material’s price has fallen, but not yet to the same level as last year.

Q: Are there some specific measures to improve the company’s brand and social image?

A: Our company takes the brand construction as an important part of the corporate strategy. And we adhere to the Plant growth regulator and Functional fertilizer as our main brand products, establish the whole brand awareness, adhere to innovation and strengthen the brand communication, so that the brand could be constantly promoted and inserted, then the corporate brand and social image will be enhanced.

Q: The company mainly focuses on plant growth regulator and water soluble fertilizer. Is there competition in the business?
A: The development time of Plant growth regulator industry in China is still relatively short. Adhering to the strategy of differentiation and providing users with whole-process and integrated solutions is the marketing method established by the company through many years of practice, which is conducive to helping users achieve the purpose of application. And we also think that rich products can widely meet the diversified needs of the application field.

Q: What do you think of ESG (environmental protection, social responsibility, corporate governance)? Is it helpful to increase the company's valuation?

A: To create the comprehensive value of economy, society and environment and promote sustainable development is an important basis for strengthening corporate governance and enhancing the core competitiveness of enterprises. It is also an inevitable choice to implement the new development concept and adapt to the sustainable development of economy and society. The company will continue to promote the practice of social responsibility.

Q: Has the technicals project started in Chongqing Wansheng? How is it going?

A: The procedures for EIA and performance assessment of the new project are really complicated and have not been started yet. We will try to complete the land procedures before the end of the year and start work as soon as possible.

Q: As Guoguang adopts multi-brand operation, will each production subsidiary under the jurisdiction of Guoguang act as an agent to produce Guoguang brand products? For example, whether Hebi Quanfeng can produce Guoguang’s Regulator and Water soluble fertilizer?

A: Since the products of each subsidiary are not exactly the same, in principle, each subsidiary produces its own brand of products.

Q: Could you talk about the company's production capacity? In recent years, how many formulations registration certificates has the company obtained abroad?

A: At present, the company has a total of 31 technicals registrations, IPO technicals production capacity has been put into production.

Hebi Quanfeng, which merged by Guoguang this year, has a large production capacity, in addition, Guoguang is also to improve technicals production capacity in Wansheng. At present, Guoguang has obtained 8 registrations of formulations abroad.

Q: What are the biggest challenges and difficulties faced by the company in the next five years? How does the company plan to respond?

A: The company's downstream industry is agriculture, demand is extremely rigid and relatively stable. The most important challenge in the future is the ultra-high fluctuation of upstream raw materials. Some raw materials have increased exponentially, but the income of downstream farmers is limited, and the cost sharing and digestion capacity is limited, which may affect the profitability and development of the company.

Q: In the face of extreme climate environment such as high temperature, drought or low temperature frost, what products are on sale in the company? Talk about the revenue situation of the above products up to now?

A: Facing the extreme weather conditions, the company sells (+)-Abscisic acid, Humic acids, Calcium fertilizer and so on, which can alleviate the damage to crops to a certain extent.

Q: Can you explain what is biopesticide and talk about the company's business operation?

A: Biopesticides include biochemical pesticides, microbial pesticides and plant pesticides. Our company's subsidiaries, such as Runer, Yer Shuangfeng, China Agrotech, Hebi Quanfeng, have more than 20 biological pesticide product registration (including 5 technicals products),such as microbial pesticide 20 billion spores/g Bacillus subtilis WP, 16000IU/ mg Bacillus thuringiensis WP, Botanical pesticide 0.3% Matrine SL, Biochemical pesticide 0.01%24-epibrassinolide SL.

Guoguang’s half-year report of 2022 showed that the company's revenue from main business was 875 million yuan, up 34.16% year on year; Net profit attributable to its parent was 140 million yuan, down 3.67% year on year; Deduct non-net profit 131 million yuan, down 8.89% year on year; In the second quarter of 2022, the company's single-quarter main revenue was 637 million yuan, up 39.09% year on year; Net profit attributable to its parent in single quarter was 995.568 million yuan, down 5.89% year on year; Single quarter deduct non-net profit 98.3824 million yuan, down 5.46% year on year; The debt ratio is 29.05%, the investment income is 0.0000 yuan, the financial expenses are 291,000 yuan, and the gross profit rate is 40.0%.