Yangnong Chemical(SH:600486) KAIYUAN SECURITIES·2024-04-23 05:32Investment Rating - The investment rating for the company is "Buy" (maintained) [2][13]. Core Views - The company's performance in Q1 2024 met expectations, with revenue of 3.176 billion yuan, down 29.43% year-on-year, and a net profit attributable to shareholders of 429 million yuan, down 43.11% year-on-year. The decline in sales volume for raw materials and formulations was offset by a 36% reduction in management expenses through cost reduction and efficiency improvement [6][7]. - The report maintains profit forecasts for 2024-2026, expecting net profits of 1.914 billion, 2.546 billion, and 2.840 billion yuan respectively, with corresponding EPS of 4.71, 6.27, and 6.99 yuan per share. The current stock price corresponds to P/E ratios of 12.9, 9.7, and 8.7 times [6][9]. - The company is expected to benefit from the orderly advancement of the Huludao project, indicating a confirmed medium to long-term growth potential [6]. Financial Summary - In Q1 2024, the sales volume of raw materials and formulations was 25,000 tons and 15,000 tons respectively, down 10.7% and 21.3% year-on-year. Revenue from raw materials and formulations was 1.724 billion yuan and 861 million yuan, down 40.0% and 13.3% year-on-year [7]. - The average price (excluding tax) for raw materials and formulations was 69,100 yuan/ton and 57,500 yuan/ton, down 32.8% and up 10.2% year-on-year, indicating a decline in both quantity and price for raw materials, while formulations saw a price increase but a volume decline [7]. - The gross margin and net margin for Q1 were 24.34% and 13.52%, down 3.15 and 3.25 percentage points year-on-year, reflecting pressure on profitability [7]. - The company’s total revenue for 2022 was 15.811 billion yuan, which decreased to 11.478 billion yuan in 2023, with an expected recovery to 13.668 billion yuan in 2024, representing a year-on-year growth of 19.1% [9][10]. Market Dynamics - Since Q4 2022, the global pesticide market has entered a destocking cycle, with many pesticide products facing insufficient demand and a new round of capacity expansion entering production, leading to price declines to historical lows. As of April 22, 2024, the average prices for glyphosate, paraquat, and bifenthrin were 25,700 yuan, 61,500 yuan, and 142,800 yuan per ton, down 37.6%, 15.7%, and 35.9% year-on-year [8]. - The report notes a decrease in glyphosate inventory since March 2024, with a current inventory of 54,800 tons and a slight price increase, indicating a potential recovery in pesticide demand as destocking progresses [8].