SAL(SH:603970) Zheng Quan Shi Bao Wang·2025-11-17 10:51Core Viewpoint - Zhongnong Lihua (603970) announced the termination of its acquisition of Taizhou Agricultural Materials Co., after nearly six months of planning, due to the inability to reach consensus on core terms of the transaction [1][2]. Group 1: Acquisition Details - In May, Zhongnong Lihua signed a letter of intent to acquire at least 50% of Taizhou Agricultural Materials, aiming to make it a subsidiary [1]. - Despite conducting financial and legal due diligence, the parties could not agree on key terms, leading to the termination of the letter of intent as per its provisions [1][2]. - The company stated that the termination of this investment will not significantly impact its financial or operational status [2]. Group 2: Taizhou Agricultural Materials Overview - Taizhou Agricultural Materials is listed on the New Third Board and operates across various provinces in China, with a product range exceeding 300 types, including pesticides, fertilizers, agricultural films, and seeds [3]. - In 2024, Taizhou Agricultural Materials reported revenue of 603 million yuan, a decrease of 3.51% year-on-year, and a net profit of 39.36 million yuan, down 19.42% year-on-year [4]. - The company faces challenges such as overcapacity, price pressures, and a competitive market environment, which have affected sales and profitability [4]. Group 3: Industry Context - The agricultural materials industry is experiencing a downturn, with factors such as extreme weather, rising planting costs, and low agricultural product prices impacting farmer investment and sales growth [4][5]. - Zhongnong Lihua's main business involves pesticide distribution and agricultural technology services, with expectations of industry consolidation in 2024 [5]. - The pesticide industry is currently facing a decline in raw material prices, with a 41.7% drop in 2023 followed by an additional 9.1% decrease in 2024, leading to a challenging market environment [5]. Group 4: Financial Performance - In the first three quarters of the year, Zhongnong Lihua reported revenue of 8.95 billion yuan, a year-on-year increase of 5.11%, while net profit fell by 13.63% to 151.2 million yuan [6]. - As of November 17, Zhongnong Lihua's stock price was 13.95 yuan per share, with a total market capitalization of 3.75 billion yuan [7].