Aveneu Park, Starling, Australia

Lier Chemical (002258): Pesticide product prices continue to drag down performance optimistic about glufosinate income and profits

Lier Chemical (002258): Pesticide product prices continue to drag down performance optimistic about glufosinate income and profits

The event company released the 2019 annual results bulletin. The company expects to achieve operating income of 41 in 2019.

63 ppm, a 10-year increase3.

40%, net profit attributable to mothers3.

11 trillion, a decrease of 46 a year.

14%.

The predicted net profit is close to the median of the performance indicator interval of the three quarterly budget estimates (2.

31-4.

04 billion).

  Intensified market competition, sluggish downstream demand, increased income from pesticide products will not increase profits In 2019, the global agrochemical market is sluggish, demand for pesticides is growing, and competition in the pesticide market is increasing.

The price of the company’s major pesticide products suffered a breakthrough.

Among the core products, the company’s core product glufosinate crude drug products averaged 12 in 2019.

33 million / ton, a significant decline of about 30 in the past.

41%.

Therefore, although the company can achieve an increase in the scale of production and sales in 2019, it has achieved an increase in operating income, operating profit, and net profit attributable to its mothers, respectively.43.

70% and 46.

14%.

  Guang’an Lier Potassium Ammonia Potassium and MDP are on-line, which is expected to significantly reduce production costs. On December 25, 2019, the company issued an announcement on the suspension 南宁桑拿 and production of its subsidiary, Guang’an Lier.

  Guang’an Lier produced the glufosinate plant process by 2018 as the traditional mainstream Grignard-Strecker process, and the shutdown and integration means that the company’s (part of) glufosinate capacity may be successfully transformed into a new one with MDP as an intermediate.Production route.

Compared with the Grignard-Strecker process, the production cost of the new process has shrinkage and compression, or it can significantly increase the profit margin of the company’s glufosinate products.

The suspension of production is expected to have a short-term adverse impact on the company’s operations: in the first three quarters of Guang’an Lier, the total net profit will be zero.

Calculated at 3.5 billion, if the suspension of production for 3 months will result 成都桑拿网 in a decrease in the total net profit attributable to the mother in the 19Q4-20Q1 consolidated statement by 0.

About 1.2 billion.

However, the suspension of production and integration will continue to benefit production and operation in the long run.

  The long-term demand for glufosinaldehyde is good, and the new process route helps the company win the price game. Among the mainstream herbicides, paraquat and glyphosate have a gradually increasing global distribution due to toxicity issues.It can also be combined with glyphosate to solve the problem of crop resistance, and the market demand is gradually increasing.

According to the output value generated by the industry planning, the price has dropped significantly. At present, the price of glufosinate has fallen to less than about 110,000 / ton, which is close to the full cost of mainstream technology, and the industry has entered a fierce price game stage.

  In this context, the new process route of self-produced MDP is expected to enable the company to obtain valuable glufosinate production cost advantages, help the company stand out in the price game, consolidate the company’s leading scale, and expand the company’s market share.

  The planned project has initially landed, and long-term growth can be expected. The company’s planned project continues: 1 The company signed an investment agreement with the Management Committee of the Mianyang Economic and Technological Development Zone on July 13, 2018, and will invest 1.5 billion US dollars to build 5 into biological and new material intermediate production linesAnd supporting facilities construction projects; 2) On September 27, 2018, signed the “Project Investment Agreement” with the Jingzhou Economic and Technological Development Zone Management Committee, and plans to invest 2 billion US dollars in the construction of fine chemical products, new materials, high-efficiency and safe pesticides, etc.15% after-tax investment income, also has a net profit of nearly 300 million); 3) At the same time as the annual report, the company announced that the company will build a new one.

5 toluene methyl phosphorus dichloride, phosphorus flame retardants and L glufosinate production lines and supporting engineering projects.

The total investment of the project is expected to be 10ppm, and the construction period is expected to be three years, of which 1.

The 5 methyl toluene methyl dichloride production line has begun construction and will reach capacity in June 2020; 2000 tons of phosphorus-containing flame retardants (Phase 1) and 3000 tons of L-glyphosate (Phase 1) production lines are expected to start from January 2020Construction started in January 2022 and reached production.

According to preliminary estimates, the operating income will increase by about 7 after the project is fully completed.

600 million US dollars, increasing gross profit by about 1.

3.7 billion yuan.

Through supplementary projects, the company’s product lines around glufosinate and other products will be further expanded, with long-term growth expected.

  We predict that the company’s net profit for 2019-2021 will be 3 respectively.

09, 4.

14, 5.

4.4 billion, corresponding to PE of 24X, 18X, 13X, maintaining the “Buy” level.