Yangnong Chemical (600486): Q3 performance slightly increased acquisition of pesticide product rich product structure

Yangnong Chemical (600486): Q3 performance slightly increased acquisition of pesticide product rich product structure

Introduction to this report: The price of raw materials has dropped, and the profitability of pyrethroid has been maintained; Sinochem crops, agro-industrial companies have consolidated; acquisition of four pesticide products such as propiconazole has 武汉夜生活网 a rich product structure; such as East Third Phase is expected to start before the end of 19 to ensure long-termGrowth, maintaining the level of overweight.

Investment Highlights: Maintain overweight.

Due to Sinochem crops, the results of the agricultural research company are completely consolidated, and the EPS for 2019-21 is raised to 4.

39/4.

81/5.

49 yuan (original 3.

41/4.

09/5.

04 yuan), with reference to comparable companies giving 19-year price-earnings ratio of 16.

05 times, corresponding target price maintained at 70.

47 yuan remains unchanged, maintaining the overweight level.

Q3 net profit increased slightly, in line with market expectations: from January to September 2019, the company achieved revenue of 70.

6.2 billion yuan (+ 1% year-on-year.

09%), achieving net profit of return to mother 10.

7 billion (+14 compared to the same period last year).

69%), in line with market expectations.

After retrospective adjustments, net profit attributable to mothers was achieved in Q3 20192.

190,000 yuan (+0 compared to the same period last year).

55%).

The first three quarters of performance increased because: (1) the average price of pyrethroid rose year-on-year, and the pesticide sales were 22 in January-September 2019.

58 million / ton, with an annual increase of 1.

99 million / ton, the average price of raw materials and chemicals dropped sharply year-on-year; (2) Sinochem crops, agricultural research company completely consolidated.

1.

2.8 billion acquired 4 pesticide products from Yangnong Group, which are Phase III products of Youjia.

The company plans to purchase the intangible asset ownership of four pesticide products, anisole, propiconazole, fluorourea, and flufenaproxy, held by Yangnong Group and its subsidiaries for RMB 128.35 million. The target technology corresponds to the annual output.1,000, 2000, 200, and 500 tons, respectively.

The four products mentioned above are all excellent products of Phase III of the company. They were all certified as “process technology reaches the international advanced level and can be industrialized production” at the Jiangsu Province Chemical Industry Association’s process advancement demonstration in April 19th.

The acquisition will accelerate the industrialization of the three products of the Youjia Phase III project.

Youjia Phase III is aiming to start construction at the end of 19th.

In the public announcement of the environmental impact assessment of the third phase of Youjia, some equipment has been budgeted for, and construction is expected to begin around the end of 19th.

The project invested 20 trillion U.S. dollars to construct 11,475 tons of pyrethroid, etc., 1,000 tons of herbicides and 3,000 tons of fungicides, reaching an annual profit of 3%.

600 million.

Risk warning: dicamba exports continue to be sluggish, and the price of pyrethroids continues to fall.