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Yangnong Chemical (600486) Incident Review: The government approval of Youjia Phase III project: room for future growth

Yangnong Chemical (600486) Incident Review: The government approval of Youjia Phase III project: room for future growth

Event: On November 22, 2019, Nantong Administrative Examination and Approval Bureau approved the third-phase construction project of Jiangsu Youjia Plant Protection Co., Ltd .: from the perspective of environmental protection only, the company has an annual output of 10825 tons of pyrethroids and 50 tons 南宁桑拿 of evilsInsacidone, 200 tons of thiophenebenone, 2,000 tons of propiconazole, 200 tons of fluorophenylurea, 500 tons of high-efficiency herbicide, 1,000 tons of anisole and 20568.

The construction of a 6-ton by-product project is feasible at the proposed address.

On December 9, 2019, the company announced the resolution of the 3rd Extraordinary Shareholders’ General Meeting in 2019: the approval of related transactions such as borrowing from Yangnong Group.

The company’s board of directors elected the new chairman Qin Hengde.

Viewpoint: Jiangsu Youjia Phase III and Phase IV construction project will become the company’s new profit growth point. Company investment20.

The US $ 2.2 billion Youjia Phase III project has already begun construction through environmental impact assessment. It is expected to have an average annual operating income of 15 after completion.

410,000 yuan, with a total investment return of 18.

40%, Youjia Phase III is expected to start production in the second half of next year.

According to the company’s announcement on October 13, 2018, it plans to invest 4.

The 300 million tons of Youjia Phase IV (3800 tons of bifenthrin, 1,000 tons of flufenatine, 120 tons of santhrin and 200 tons of hydroxyphenyl ester pesticides) have been planned and construction is expected to start after the completion of Youjia Phase III, The company’s future growth is worth looking forward to.

Yangnong Chemical’s core competitiveness includes production capacity and engineering transformation capability. In the context of good global competition in the pyrethroid business and the continued market boom, future products have profitability and good development prospects.

Based on the historical average ROE of 16%, it is expected to contribute to the normal state every year after full production3.

Net profit of over 9 billion.

The budget eases the pressure on the company’s funds in 2019.

The acquisition of Sinochem crops for USD 100 million, the agricultural research company, and the huge investment in the construction of the third-phase project of Youjia, borrowed RMB 500 million from Yangnong Group for a period of six months, and the annualized interest rate was reduced by 3%.

70%, alleviating the pressure on the company’s funding.

According to the company’s announcement on October 10, 2019, the company’s acquisition of Sinochem’s crops was completed in September this year, and the company’s financial consolidation was achieved in the third quarter. Sinochem’s core subsidiary, Shenyang Kechuang’s management and engineering capabilitiesIt is very outstanding, and it is also among the forefront of all pesticide companies in China; Agro-Research has the only national key laboratory in the field of pesticides, and it is also the only company in China that has the ability to create pharmaceuticals.

Under the leadership of the new chairman, Yangnong has ushered in new opportunities for the future development of Sinochem Group. At present, Sinochem Group has five business divisions: energy division, chemical division, agricultural division, financial division, real estate division, and new chairman Tan Hengde.As the president of Sinochem Group’s agricultural division, the existing division of fertilizer and seed business of the agricultural division, this personnel adjustment is conducive to the future integration of agricultural seed fertilizer industry and preparation for the development of modern agriculture.

In the context of the “two-chemical cooperation”, Sinochem-Sinochem-Sinochem-Sinochem-Agricultural Resources-ADAMC and Syngenta-Sinochem-Sinochem-ADAMA) -Syngenta) Alliance, the new chairman of Yangnong Qin Hengde is also the president of Syngenta (China) Investment Co., Ltd. The arrival of President Tan will make Yangnong contact more with Syngenta, and Yangnong will become more international.It is possible for Yang Agrochemicals to approach SAS in the future and seek more business opportunities in the SAS Alliance.

Earnings Forecast and Investment Rating Based on the company’s recent operating conditions and the latest financial data, the EPS for 2019-2021 is adjusted to 3.

51/3.

54/4.

71 yuan (the original EPS forecast was 3).

67/3.

68/4.

90 yuan), the company’s operating income for 2019-2021 will be 85.

02/95.

02/114.

81 million adjusted to 84.

88/86.

89/103.

3.4 billion, net profit attributable to mother from 11.

38/11.

42/15.

20 trillion is adjusted to 10.

86/10.

97/14.

6 billion, PE is 16/16/12 times.The company has good quality, complete research and production and marketing industry chain, and the advantages of integration of basic raw materials-intermediates-original drugs are obvious.

We believe that the integrity of the industrial chain is more important than the flexibility of the product. The company is the best target of the industrial chain and has good growth.

Maintain the “overweight” rating.

Risks indicate the risks of Sinochem Crops and Agricultural Research Corporation’s fourth quarter budget, and the project construction progress is less than expected.