SAL(SH:603970) Haitong Securities·2024-09-05 09:12Investment Rating - The investment rating for Zhongnong Lihua (603970) is "Outperform the Market" and is maintained [2]. Core Views - In the first half of 2024, the company achieved a net profit of 153 million yuan, representing a year-on-year increase of 9.85%. The operating revenue reached 6.532 billion yuan, up 3.92% year-on-year, primarily due to an increase in both the volume and value of pesticide exports [4][5]. - The company has accelerated its expansion in the domestic field crop market, conducting numerous field trials and technical service demonstrations in major crop planting areas [5]. - The company has also made significant progress in overseas sales of self-registered products, achieving sales that match the total for the entire year of 2023 in various South American countries [5]. Financial Performance - In the first half of 2024, the gross profit margin was 6.66%, an increase of 0.17 percentage points year-on-year, while the net profit margin was 2.64%, a decrease of 0.06 percentage points year-on-year [4]. - The company’s sales expenses and management expenses decreased by 2.15% and 10.26% year-on-year, respectively, while financial expenses dropped by 32.41% due to reduced exchange losses [4]. - The forecast for net profit for 2024-2026 is 246 million, 288 million, and 335 million yuan, respectively, with corresponding EPS of 0.91 yuan, 1.07 yuan, and 1.25 yuan [5][6]. Market Comparison - The stock price as of September 4, 2024, was 12.79 yuan, with a 52-week price fluctuation range of 11.78-21.20 yuan [2]. - The company’s total market capitalization is 3.438 billion yuan, with a total share capital of 269 million shares [2]. - The company is compared with peers in the industry, with a projected PE ratio of 18-20 times for 2024, indicating a reasonable value range of 16.38-18.20 yuan [5].