Yangnong Chemical(SH:600486) Guotai Junan Securities·2024-04-26 04:32Investment Rating - The report maintains a "Buy" rating for Yangnong Chemical (600486) with a target price of 79.91 CNY, unchanged from the previous rating [1][2]. Core Views - The company's Q1 performance met market expectations, with a significant reduction in expense ratios, indicating effective cost control and efficiency improvements. The pesticide market is showing signs of recovery, which is expected to mitigate the seasonal performance fluctuations [1][2]. - The report forecasts earnings per share (EPS) for 2024, 2025, and 2026 to be 4.21 CNY, 4.63 CNY, and 5.40 CNY respectively, maintaining the 2024 target price at 79.91 CNY [1][2]. Financial Summary - Q1 2024 revenue was 31.76 billion CNY, a year-on-year decrease of 29.43%, with a net profit attributable to shareholders of 4.29 billion CNY, down 43.11% year-on-year. The gross profit margin was 24.34%, down 3.15 percentage points year-on-year, but improved by 1.01 percentage points quarter-on-quarter [1][2]. - The report highlights a continuous decline in sales and management expense ratios, indicating successful cost-cutting measures. The sales volume of raw materials decreased by 10.69% year-on-year, while the average price of raw materials increased by 6.91% year-on-year [1][2]. - The financial forecast for 2024 estimates total revenue of 13.94 billion CNY, with a net profit of 1.71 billion CNY, reflecting a recovery trend in the pesticide market [2][6]. Market Context - The pesticide market is experiencing a recovery, with rising prices for glyphosate and high industry operating rates, suggesting a positive outlook for the second and third quarters, which align with the traditional purchasing season in South America [1][2]. - The report notes that the company's projects are progressing well, with the first phase of the Huludao project expected to commence production in 2024, and subsequent phases advancing rapidly [1][2].