Fengyuan Biochemistry: Performance Falls Sharply

the company reported a net profit of 21.35 million yuan in the first quarter, down 37% year-on-yearThe sharp decline in performance was due to a sharp decline in the price of domestic one-water citric acid, a 25% year-on-year decline in the price of 98% concentration lysine, and a near-year-on-year decline in the price of ethylene oxideIn addition, the amount of fuel ethanol subsidy in the first quarter of last year was accounted for in accordance with 2251 yuan/tonne (07 standard), and in the first quarter of this year, it was accounted for in accordance with 2185 yuan/tonne (08 standard), down 66 yuan/tonne year-on-year, and the subsidy revenue decreased by 6.6 million yuan in accordance with the estimate of 100,000 tons of production and sales per quarter2009 Outlook:In the two main industries, citric acid profits are difficult to increase, fuel ethanol profit stability is mainly: the annual report review has mentioned that the high export price of citric acid is due to the EU to protect the interests of local producers and China to implement a price lock-in policy (lock prices will also be adjusted according to fluctuations in raw material prices) and high eras, in the economic downturn to expect the EU to substantially increase the lock price is not realistic;for the fuel ethanol business, unless the domestic refined oil prices than the 2008 average increase of more than 40% (2008 90 gasoline excluding tax average price of 4854 yuan / ton), fuel ethanol still need to rely on subsidies to achieve only small profits, but good in the profitability is more stablethe gradual turnaround of the Yashan pear industry: because the management of the company in the early stage will focus on citric acid, fuel ethanol, lysine and other major industries to improve, making the pear industry inevitably lossHowever, as the company strengthens the management of the lushan pear industry, it is expected that the mining industry will gradually turn a lossthe oil business break-even: since May last year, the price of edible oil fell sharply (prices had fallen by the end of last year), but the cost of corn did not fall until October last year, resulting in an already low gross margin of corn oil processing industry in the fourth quarter of last yearWith the stabilization and small recovery in the price of edible oil at the beginning of this year, earnings are expected to gradually pick up and achieve break-evenepoxy ethane earnings will now decline year-on-year: ethylene oxide prices are closely related to crude oil prices, due to this year's difficulties in the 2008 nearly 100 dollars / barrel of the average annual price, ethylene oxide earnings decline is inevitable, the 2009 net profit contribution is expected to decline by 15 million yuan, contribute to profit of 10.04 million yuanoverall: it is expected that citric acid, grease and ethylene oxide will add a total of 18.2 million yuan in net profit in 2009;valuation and recommendations:even if the yayama pear industry completely turned a profit, the net profit in 2009 is only 121 million yuan, the company's 2009 price-earnings ratio and price-to-book ratio are still as high as 40 times and 2.4 times, respectively, the valuation is still unattractive, we maintain a "avoidance" rating."the company recorded a net profit of RMB21.35 million in the first quarter, down 37% year-on-yearThe sharp decline in performance was due to a sharp decline in the price of domestic one-water citric acid, a 25% year-on-year decline in the price of 98% concentration lysine, and a near-year-on-year decline in the price of ethylene oxideIn addition, the amount of fuel ethanol subsidy in the first quarter of last year was accounted for in accordance with 2251 yuan/tonne (07 standard), and in the first quarter of this year, it was accounted for in accordance with 2185 yuan/tonne (08 standard), down 66 yuan/tonne year-on-year, and the subsidy revenue decreased by 6.6 million yuan in accordance with the estimate of 100,000 tons of production and sales per quarter 2009 Outlook: 　　In the two main industries, citric acid profits are difficult to increase, fuel ethanol profit stability is mainly: the annual report review has mentioned that the high export price of citric acid is due to the EU to protect the interests of local producers and China to implement a price lock-in policy (lock prices will also be adjusted according to fluctuations in raw material prices) and high eras, in the economic downturn to expect the EU to substantially increase the lock price is not realistic; for the fuel ethanol business, unless the domestic refined oil prices than the 2008 average increase of more than 40% (2008 90 gasoline excluding tax average price of 4854 yuan / ton), fuel ethanol still need to rely on subsidies to achieve only small profits, but good in the profitability is more stable the gradual turnaround of the Yashan pear industry: because the management of the company in the early stage will focus on citric acid, fuel ethanol, lysine and other major industries to improve, making the pear industry inevitably loss However, as the company strengthens the management of the lushan pear industry, it is expected that the mining industry will gradually turn a loss the oil business break-even: since May last year, the price of edible oil fell sharply (prices had fallen by the end of last year), but the cost of corn did not fall until October last year, resulting in an already low gross margin of corn oil processing industry in the fourth quarter of last year With the stabilization and small recovery in the price of edible oil at the beginning of this year, earnings are expected to gradually pick up and achieve break-even epoxy ethane earnings will now decline year-on-year: ethylene oxide prices are closely related to crude oil prices, due to this year's difficulties in the 2008 nearly 100 dollars / barrel of the average annual price, ethylene oxide earnings decline is inevitable, the 2009 net profit contribution is expected to decline by 15 million yuan, contribute to profit of 10.04 million yuan overall: it is expected that citric acid, grease and ethylene oxide will add a total of 18.2 million yuan in net profit in 2009; valuation and recommendations: even if the yayama pear industry completely turned a profit, the net profit in 2009 is only 121 million yuan, the company's 2009 price-earnings ratio and price-to-book ratio are still as high as 40 times and 2.4 times, respectively, the valuation is still unattractive, we maintain a "avoidance" rating." 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