Lier Chemical (002258) First Coverage Report: Multi-point Flowering and Sedimentation

Lier Chemical (002258) First Coverage Report: Multi-point Flowering and Sedimentation

Key points of investment: Benefit from increased industry concentration and rapid company development: The pesticide industry has continued to withstand high environmental pressures since the “Thirteenth Five-Year Plan”, and most of the backward production capacity has withdrawn from the market one after another, and the industry concentration has continued to increase. From 2014 to 2018The monthly output of domestic pesticide raw materials (converted to 100% of the active ingredient) will replace the 20 indicator by 30 inches.

The company, as the largest domestic manufacturer of potassium glufosinate, has benefited significantly, with an annual output of pesticides2.

68 up to 12.

92 is the highest, the industry sales ranking rose from 22nd to 8th.

Continue to stabilize research and development funding, leading the process to help the company rise: The company’s average R & D expense revenue ratio for 2014-2018 was 3.

87%, which is in the forefront 深圳丝袜会所 of listed companies in the pesticide industry (the average proportion of listed companies is 2).

5%); Through long-term stable research and development and promotion, the company optimized the synthesis process of glufosinate to improve the comprehensive yield above 95%.

At the same time, the production cost is controlled at around 7 million yuan, which is 8?
10 million / tonne glufosinate production cost.

The basis for the company to be a global leader in glufosinate.

Demand has grown rapidly, and the company’s production capacity has continued to lead: under the current situation of domestic pesticide industry companies starting to replace, the company has steadily started operations. It has a glufosinate production capacity of 11,400 tons / year, and more than 50% of domestic effective production capacity is available.

With the comprehensive expansion of paraquat in Thailand and Brazil in 2020, France, Vietnam, and India will enter glyphosate due to carcinogenic storms. It is expected that there will be two.

The market gap of 6 initial paraquat and 3 to about glyphosate helped short-term growth of glufosinate demand.

At the same time, the promotion of glufosinate-resistant transgenic crops will increase the long-term growth of glufosinate and glyphosate compound formulations.

The company’s sustainable and stable production capacity continues to maintain its position as the global leader in glufosinate.

The future of the Guang’an project is expected: the trial production of the fluroxypyr project at the Guang’an base resumed in May, and the 1,000-ton / year flucyclazole capacity of the previous project is expected to be completed this year.

It is estimated that only propafluchlor and fluroxypyr are expected to increase the company’s revenue by about 1.5 billion a year; at the same time, the Guang’an base will invest 1 billion to build a new 15,000 tons / year MDP, a phosphorus-containing flame retardant, an L-glyphosate production line andSupporting projects, the new project is conducive to maintaining the company’s leading business of glufosinate, and the new development of phosphorus-containing flame retardant projects will add a profit point for the company in the future.

Profit forecast: Based on the price of new products, production capacity and judgment on the future industry boom, the company’s operating income for 2019-2021 is expected to be 45.

73/60.

36/73.

39 trillion, the corresponding EPS is 1.

21/1.

83/2.

37, P / E are 11, respectively.

08, 7.

33, 5.

66.

Give “Buy” rating.

Risk factors: Product price fluctuations affect profitability, and the Guangan project has not been put into operation as expected.