Yangnong Chemical (600486) 2019 Interim Review: Strong Pesticide Drives Performance Growth

Yangnong Chemical (600486) 2019 Interim Review: Strong Pesticide Drives Performance Growth

Event: On August 26, 2019, Yangnong Chemical released the 2019 Interim Report, and the company achieved sales revenue of 28 in the first half of the year.

940,000 yuan, at least -6.

49%, net profit attributable to mothers6.

27 trillion, ten years +11.

46%; of which, sales revenue in the second quarter was 13.

24 ‰, at least -10.

82%, compared with -15.

67%, net profit attributable to mother is 30,000 yuan, +3 in ten years.

88%, month-on-month.

26%.

In terms of sales data, domestic pesticide sales will increase 55 in the next few years, driven by strong products such as pyrethroids.

5%, domestic health medicine sales increased against the trend7.

37%, export sales were disrupted by the effects of large tonnage dicamba -28.

94%.

In terms of price data, pesticides 23.

08 thousand yuan / ton, previously +11.

87%, herbicide 3.

08 thousand yuan / ton, -23 per year.

26%.

Specific to the subsidiary, Ushi Company achieved operating income12.

0.6 million yuan, ten years +6.

7%, net profit 3.

1.4 billion, +59 in ten years.

4%; Youjia Company achieved operating income of 10.

95 ‰, -28% a year, net profit 2.

44 trillion, -27 a year.

8%.

Key points for investment: Leader in the pesticide industry, with a comprehensive layout of herbicide, pesticide and fungicide business, which is highly competitive in the industry.

The company is a leader in the pesticide industry, with a comprehensive layout of the herbicide, pesticide and fungicide industries. At present, the company has 3 bases / year of glyphosate production capacity and 2.

5 years / year capacity of dicamba; in terms of pesticides, the company is a leader in agricultural hygienic pyrethrin and agricultural pyrethroid, which is mainly used for the elimination of health pests, accounting for more than 70% of the domestic market.Field pest prevention is widely used in fruit trees, vegetables, tea and other crops. The company integrates 5,000 tons of methyl pentamate, a key intermediate of the upstream pyrethrin, and has a competitive advantage in integrated production. In terms of fungicides, the company has pyrazoleIt is mainly used for curing capsicum blight, potato late blight and Chinese cabbage nodule disease. Pyrazolin is a new type of broad-spectrum fungicide.

In addition, the company has similar products such as plant growth regulators.

Outward M & A strengthens competition in pesticide business.

On August 4, 2018, the company issued an announcement that it intends to use cash to transfer 100% equity of Sinochem Crops and Agro-Research Corporation held by shareholders Sinochem International.

Sinochem’s 2018 revenue was 32.

9.8 billion, net profit attributable to mothers1.

160,000 yuan, total assets at the end of 2018 29.

470,000 yuan, net assets 6.

1.2 billion.Agricultural Research Corporation’s 2018 revenue was 3579.

240,000 yuan, net profit -2714.

08 million yuan, total assets at the end of 20181.

3.2 billion yuan, net assets -1.

1.2 billion.

At the transaction price of 9.

13 trillion meter, Sinochem Crops and Agricultural Research Corporation PE10.

26 times.

The completion of the acquisition is conducive to the company’s sales channels, research and development strength, and enhanced business diversity.

On August 27, 2019, the company announced that it intends to use its subsidiary, Youjia Plant Protection Insurance Capital1.

3.2 billion transfer of 100% equity of Jiangsu Baoling Chemical, Baoling Chemical’s 2018 revenue3.

苏州桑拿网265 trillion, net profit of 25.08 million yuan, total assets at the end of 20184.

600 million, net assets 2.

1.5 billion.

The plan to retreat from the city and the park gradually came to an end, and the layout of Rudong started the company’s performance growth journey.

The company started to plan the construction of the industrial park of Youjia Company in Rudong area in 2013, and realized the withdrawal from the Yangzhou headquarters to enter the park. At present, the second-phase project construction has been completed.

For example, Dongyoujia subsidiary’s 2600 tons of santhrin, 2 maimaiwei and 1,000 tons of pyraclostrobin have been put into production, and the production capacity of the Dalian Road Plant of Youshi Chemical will be gradually closed to realize the withdrawal from the city.

With the advantages of environmental protection and supporting public works gradually expanding, Rudong Industrial Park will become a new space for the company’s performance growth in the future.

In 2019, the company will continue to focus on the third phase of the project of Youjia, including 11,475 tons / year insecticide, 1,000 tons / year herbicide, 3000 tons / year fungicide and 2500 tons / year chloroacetophenone project, and cultivate newGrowth point.

In addition, 3.

26 Formaldehyde pesticide preparations, docks and storage projects, 3800 tons of bifenthrin, 1,000 tons of fluorophenamine are also planned to be put into production in Rudong.

Profit forecast and investment rating: The company is a leader in the pesticide industry. The leader of the pyrethroid series products is unshakable. The dicamba market has ample room for growth. After the new capacity such as Dongyoujia Phase III is reached, it will increase the company’s profits.

In line with the principle of financial prudence, we will not consider the financial impact of the acquisition of Sinochem Group’s assets and Baoling Chemical on the company for the time being. It is expected that the company will be 3 by 2021 in 2019.

12, 3.

46 and 4.

12 yuan / share, maintain “Buy” rating.

Risk prompts: product prices fall; downstream demand for pesticide products exceeds expectations; segmentation resumes production; Rudong’s new capacity construction progress is gradually expected; the acquisition of group assets fails to meet expectations; the uncertainty of exchange loss gains.

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