BSM(SZ:300796) Shanxi Securities·2024-09-13 14:23Investment Rating - The report assigns an "Accumulate - A" rating to the company, indicating a positive outlook for investment [1]. Core Views - The company is a leading domestic player in the herbicide market, specifically in the production and sales of Dimethenamid-P, holding approximately 50% market share in China. The company has established a strong competitive advantage through its production capabilities and cost control [1][14]. - The company is expanding into the C5 chemical industry, which is expected to provide new growth opportunities. The C5 project is in the trial production phase and aims to enhance the company's product offerings and profitability [1][14]. - The financial forecasts for the company indicate a significant increase in net profit from 1.23 billion yuan in 2024 to 3.00 billion yuan in 2026, reflecting a compound annual growth rate (CAGR) of 44.7% [1][3]. Summary by Sections Company Overview - The company, established in 2003, focuses on the production and sales of Dimethenamid-P, with 85.6% of its revenue coming from this segment in 2023. The company has a robust production process and self-sufficient supply of key intermediates, which supports its market leadership [1][14]. - The company has begun supplying BASF and has made significant investments in new projects, including an 8,500-ton annual capacity for ketone series green materials, which will enhance its production capabilities [1][14]. Market Position - The company has a strong foothold in the domestic herbicide market, with a significant share and established relationships with major clients, including BASF and FINCHIMICA SPA. The company’s products are also exported to developed markets [1][14]. - The report highlights the high barriers to entry in the pesticide industry, which protects the company from new competitors [1][14]. Financial Performance - The company’s revenue for 2023 is projected at 699 million yuan, with a net profit of 88 million yuan, reflecting a year-over-year decline due to market pressures. However, the outlook for 2024 and beyond is positive, with expected revenue growth driven by new projects and market expansion [3][19]. - Key financial metrics such as gross margin and return on equity (ROE) are expected to improve steadily, with ROE projected to reach 13.4% by 2026 [3][19]. C5 Chemical Project - The C5 project is expected to significantly contribute to the company’s growth, with a focus on producing high-value products such as 3-pentanone and 2-pentanone. The project is in the trial production stage and aims to strengthen the company's supply chain [1][14]. - The report emphasizes the broad application prospects for C5 fractions, particularly in high-performance materials, which could open new markets for the company [1][14].