海利尔：行业景气基本触底，期待新项目放量

Investment Rating - The report maintains a Buy rating for the company with a target price of 18.60 RMB, based on a 15x P/E ratio for 2024 [1][9] Core Views - The pesticide industry is at the bottom of its cycle, and the company's main product prices have declined, leading to a downward revision of earnings forecasts [1] - The company's EPS for 2024-2026 is projected to be 1.24 RMB, 1.65 RMB, and 2.15 RMB, respectively, down from previous estimates of 2.68 RMB and 3.27 RMB for 2024-2025 [1] - The global pesticide destocking cycle is in its later stages, and a recovery in demand is expected once the cycle completes [28] - The company is expanding its product portfolio and capacity, with several projects expected to be completed by 2024 and 2027, which could drive future growth [28] Financial Performance - In Q1 2024, the company reported revenue of 1.147 billion RMB, a 6.70% YoY decline, and net profit of 91 million RMB, a 40.37% YoY decline, due to falling pesticide prices [28] - Despite the price decline, the company's pesticide sales volume increased by 8.76% YoY, partially offsetting the negative impact of price drops [28] - The company's revenue is expected to grow from 4.594 billion RMB in 2024 to 6.896 billion RMB in 2026, with a CAGR of 22.3% and 22.8% for 2025 and 2026, respectively [15] - Net profit attributable to shareholders is forecasted to increase from 420 million RMB in 2024 to 733 million RMB in 2026, with a CAGR of 33.8% and 30.4% for 2025 and 2026, respectively [15] Industry Analysis - The pesticide industry has experienced a significant price decline, with the overall price index down by 62.17% compared to early 2022, and herbicide, insecticide, and fungicide price indices down by 67.32%, 56.31%, and 47.04%, respectively [28] - The destocking cycle has led to a sharp decline in prices, but inventory levels at major multinational companies have started to decrease, indicating a potential recovery in demand [28] - Despite a recent pullback in global grain prices, they remain above pre-pandemic levels, suggesting sustained demand for agricultural chemicals [28] Company Projects and Growth Drivers - The company is expanding its production capacity with several projects, including the 20,000T agrochemical formulation and fertilizer project expected to be completed in 2024 and the 50,000T project expected to be completed in 2027 [28] - The Qingdao Hengning subsidiary, which reported a loss of 141 million RMB in 2023, is expected to turn profitable as new products are launched and production capacity ramps up [28] - The company's focus on expanding its product portfolio and capacity is expected to drive future growth and profitability [28]