HLC(SH:600731) Huachuang Securities·2025-09-27 14:12Investment Rating - The report maintains a "Recommendation" rating for the pesticide industry, indicating a favorable outlook for investment opportunities in this sector [1]. Core Insights - The pesticide industry is experiencing a new upward cycle, driven by long-term demand growth linked to global food security and population increases. The global pesticide market has seen a compound annual growth rate of approximately 4.2% from 2017 to 2023 [4][6]. - In particular, insecticides are highlighted as a strong sector within the pesticide industry, with significant export growth expected. For instance, insecticide export value reached 4.5 billion yuan in Q2 2025, a 59% increase compared to Q2 2022 [4][7]. - The report emphasizes the importance of monitoring pest outbreaks, as rising temperatures are expected to increase pest populations, thereby boosting demand for insecticides [8][49]. Summary by Sections 1. Insecticides as a Preferred Sector - Insecticides are projected to outperform other pesticide categories, with a notable recovery in demand and export performance. The export value of insecticides has shown a significant increase, with Q4 2024 reaching 3.974 billion yuan, a 14.2% year-on-year growth [12][18]. - The supply expansion of insecticides has been relatively limited, which supports a favorable supply-demand balance [32]. 2. Focus on Pest Outbreaks - The report identifies pest outbreaks as a critical investment opportunity, particularly in light of climate change, which is expected to exacerbate pest issues. For example, the predicted area affected by major wheat pests in 2025 is estimated at 950 million mu [8][48]. - The correlation between rising temperatures and increased pest reproduction rates is emphasized, indicating a potential surge in demand for insecticides [49][51]. 3. Impact of Chikungunya Fever - The report discusses the Chikungunya virus outbreak as a catalyst for increased demand for insecticides, particularly those effective against mosquitoes. The outbreak in Guangdong has led to a significant rise in confirmed cases, highlighting the urgent need for pest control measures [61][62]. - The effectiveness of specific insecticides, such as Pirimiphos-methyl and Propoxur, is noted, as they are recommended for mosquito control [75]. 4. Investment Recommendations - The report suggests focusing on leading companies in the pesticide sector, such as Runfeng Co. and Yangnong Chemical, particularly those involved in high-toxicity insecticides like carbamate pesticides [4][5].