Yangnong Chemical(600486)2024-10-29 12:01Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Views - The company's Q3 performance showed year-on-year improvement, primarily driven by growth in the production and sales of raw materials and formulations, alongside ongoing cost reduction and efficiency enhancement efforts [3][4] - The company is expected to benefit from the orderly progress of the Huludao project, which is anticipated to contribute to its medium to long-term growth potential [3][4] Financial Summary - For Q3 2024, the company achieved revenue of 23.17 billion yuan, a year-on-year increase of 4.98%, and a net profit attributable to shareholders of 2.63 billion yuan, up 10.87% year-on-year [3][4] - The company’s revenue for the first three quarters of 2024 was 80.16 billion yuan, down 13.57% year-on-year, with a net profit of 10.26 billion yuan, down 24.61% year-on-year [3][4] - The projected net profits for 2024, 2025, and 2026 are 12.45 billion yuan, 14.95 billion yuan, and 20.88 billion yuan, respectively, with corresponding EPS of 3.06 yuan, 3.68 yuan, and 5.13 yuan [3][5] Business Performance - In the first three quarters of 2024, the company’s raw material and formulation sales volumes were 7.61 million tons and 3.43 million tons, respectively, reflecting year-on-year increases of 1.4% and 2.7% [4][6] - The average selling prices for raw materials and formulations decreased by 20.1% and 11.7% year-on-year, respectively, indicating ongoing pricing pressure in the agricultural chemicals market [4][6] Market Conditions - The agricultural chemicals market is currently facing price pressures due to oversupply, with 66% of tracked products experiencing price declines year-on-year [4][7] - The company’s operational excellence has allowed it to achieve year-on-year growth in production and sales despite these market challenges [4][7] Valuation Metrics - The current price-to-earnings (P/E) ratios for 2024, 2025, and 2026 are projected at 19.7, 16.4, and 11.7, respectively [3][5] - The company’s return on equity (ROE) is expected to be 11.8% in 2024, increasing to 15.5% by 2026 [5][10]