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Yangnong Chemical (600486): The epidemic has a small impact on expected performance, and the Youjia project supports mid- and long-term growth

Yangnong Chemical (600486): The epidemic has a small impact on expected performance, and the Youjia project supports mid- and long-term growth

The recent epidemic situation of the company has little impact on the company’s recent production and operation. We update as follows.

Commentary We expect the outbreak to have a small impact on the company’s long-term earnings.

According to our exchanges with the company, the company’s main original drug devices have not been discontinued since the Spring Festival holiday, and the company’s raw material inventory is too much, and the epidemic situation has little impact on the company’s production.

We expect the epidemic to only cause short-term product delivery delays, with minimal impact on customer orders and long-term product sales.

The price of pyrethroid is gradually returning to normal levels, and the Youjia Project helps the medium and long-term growth.

At present, the market price of the company’s main agricultural pyrethroid products has dropped by more than 20% compared with the same period of the previous year. However, the company’s core customer orders account for a high proportion of sales prices and relatively speaking, we expect to gradually reduce the profit margin of the agricultural pyrethroid business.

The company’s third-phase project of Youjia will build major core products such as amphrin for use in agriculture and a variety of new pesticide products. The company expects that the third-phase project of Youjia is expected to enter the commissioning stage in 2Q20.

We expect that the expansion projects of Youjia Phase IV bifenthrin, fluorophenamine and santhrin will continue to advance, and the 2020 Youjia Phase 5 project filing is also expected to be launched.

We expect the construction of the Youjia Project will help the company’s performance continue to grow.

Sales of dicamba are expected to improve gradually.

Affected by the weather in the US planting season, the increase in the soybean planting area in the United States and the delay in the promotion of dicamba-tolerant genetically modified seeds in Brazil, the company’s sales of dicamba in 2019 will vary.

At present, the company’s dicamba sales are at the bottom. We expect that the dicamba-resistant genetically modified soybeans are expected to be promoted in Brazil in 2021. The dicamba sales are expected to improve gradually.

With the integration 杭州桑拿 of agricultural assets between the two industries, Yang Agro Chemical is expected to usher in better development potential.

On January 5th, Sinochem and Sinochem Group injected the main assets of its subordinate agricultural sector into Syngenta Group. We expect to integrate the development of the agricultural industrial assets of the two chemical industries to further optimize resource allocation and give play to industrial synergy.

With its high-efficiency engineering capabilities, leading pesticide and original drug manufacturing capabilities and research and development capabilities, Yangnong Chemical expects to gain better development potential in industrial collaboration.

Estimates suggest that we temporarily maintain our 2019/20/21 profit forecast11.

86/12.

55/15.

3.2 billion.

At present, the company 杭州桑拿网 complies with the corresponding P / E ratio of 18/14 in 2020/21.

7 times.

Taking into account the evaluation switch and the company’s better growth in the future, we raise our target price by 14.

7% to 86 yuan, corresponding to 18.

3% growth space and 21 / 17x P / E ratio in 2020/21, maintain Outperform rating.

The price of risk permethrin was lower than expected, and the progress of the Youjia project exceeded expectations.

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