Summary of the Conference Call on Agricultural Chemical Industry Industry Overview - The agricultural chemical industry exhibits a cyclical pattern lasting approximately five to six years, driven by capital expenditure and demand fluctuations. Currently, the industry is at the end of a downturn cycle that began in Q3 2022 and is expected to conclude by Q2 2025, lasting nearly three years [2][7][11]. Key Points and Arguments - **Signs of Recovery**: The industry is showing signs of reversal, with prices hitting a ten-year low and some raw material price indices already reversing. In Q2 2025, China's pesticide formulation exports significantly improved after ten consecutive quarters of decline, particularly in herbicides, indicating a potential rise in industry prosperity [2][8]. - **Inventory Dynamics**: Inventory replenishment and destocking significantly impact pesticide demand. During the replenishment phase, procurement demand can reach 130% of normal levels, while during destocking, it may drop to 70%. This indicates that replenishment is a signal of industry prosperity rather than a core driving factor [9]. - **Supply-Side Reform**: The number of pesticide production enterprises in China has decreased to approximately 1,600, with 50% not entering chemical parks, indicating effective supply-side reforms. From 2021 to 2023, the new raw material production capacity added was limited, resulting in minimal impact on market supply [10][12]. Market Outlook - **Future Prospects**: The market outlook for the next few years is optimistic, with various reversal signals emerging, including price recovery, improved export data, and rising U.S. inventories. Continued domestic policy support for supply-side reforms is expected to further optimize the industry structure, leading to a new upward cycle in the agricultural chemical industry [11][12]. Company-Specific Insights - **Yangnong Chemical**: Recognized as a leading platform company in pesticide innovation, Yangnong has the capability to independently screen and modify chemical active compounds. The company has several innovative products with annual sales nearing 100 million yuan. In 2024, Yangnong is expected to account for three out of six domestically created products with annual sales exceeding 100 million yuan [3][19]. - **Runfeng Co.**: As the largest export-oriented formulation company in China, Runfeng's business model relies heavily on overseas registration certificates, which are expected to enhance its competitive edge. The company is experiencing rapid growth in Europe, the U.S., and Africa, with projections for net profits of 1.3 billion yuan in 2025 and 1.7 billion yuan in 2027 [20][21]. Additional Important Content - **Global Agricultural Giants' Outlook**: Major overseas agricultural companies like Corteva and Bayer are optimistic about their performance in the first half of 2025, raising their annual guidance. BASF noted significant recovery in herbicides, with strong performance in North America, South America, and Europe, indicating a comprehensive upward trend in the agricultural chemical industry [15][16]. - **Glycine Price Trends**: Glycine, as the largest raw material, saw its operating rate drop from 90% to 50% during the downturn but has since recovered to around 80%. Prices have been rising since April 2025, with inventory levels decreasing rapidly, suggesting a positive trend for the future [14]. This summary encapsulates the key insights and developments within the agricultural chemical industry and specific companies, highlighting the cyclical nature of the market and the emerging signs of recovery.

Industry Research Summary - Pesticide Industry Industry Overview - The global pesticide market is approximately $70 billion, highly concentrated with multinational companies such as Syngenta, FMC, Bayer, Corteva, and BASF dominating the market, providing integrated services of seeds, fertilizers, and pesticides [1][2] - The domestic pesticide market in China is fragmented, influenced by historical factors and the participation of both domestic and foreign enterprises. About 70% of raw material exports are for international markets, while 30% are for domestic sales [1][4] Market Dynamics - In 2021, a significant increase in demand occurred due to inventory replenishment, but prices began to decline from Q4 2022, leading to a bottoming out phase in 2024 and 2025 [1][5] - Key products expected to perform well in 2025 include Bacillus subtilis, Mancozeb, Abamectin, Methomyl, and Acetochlor, driven by factors such as disease outbreaks and supply shortages [1][6] Supply and Demand Analysis - Glyphosate has a global supply of approximately 1.2 million tons, with China supplying 800,000 tons and Monsanto accounting for 370,000-380,000 tons. The global demand is around 900,000 tons, with a capacity utilization rate of about 75% [1][9] - The price of glyphosate has increased from 23,000 yuan to 27,000 yuan per ton due to reduced supply and declining inventory, leading to improved profitability for companies [1][9] Product-Specific Insights - Glyphosate's future outlook is optimistic due to stable supply-demand dynamics and no new capacity additions allowed by policy [1][8] - In contrast, Glufosinate has faced oversupply issues since being listed in a restricted directory in 2024, with demand growth lagging behind supply growth, resulting in poor price and margin performance [1][10][11] Company-Specific Strategies - Yangnong Chemical's investment logic is based on capacity expansion and price elasticity opportunities, while Limin Co. focuses on reversing its main business challenges and developing innovative products [1][13] - Guangxin's core competitiveness lies in its comprehensive layout along the phosgene industrial chain, enabling it to achieve the lowest cost operations [1][15] - Runfeng Company emphasizes global formulation channel development, achieving periodic growth through continuous registration and channel establishment [1][16] Key Considerations for Industry Analysis - Important factors to monitor include cyclical trends, supply-demand relationships, the development of innovative products, and the characteristics of the formulation industry, which is asset-light and high-turnover [1][17] - Tracking inventory can be done through multinational company financial reports, communication with listed companies, and industry exhibitions [1][12]

Investment Rating - The report does not explicitly state an investment rating for the pesticide and veterinary drug industry [1]. Core Insights - The report highlights that Jiangsu Fengshan Group's pesticide business is the main source of revenue, while the new energy and advanced materials segments are still developing [19]. - Recent price increases for products such as chlorpyrifos and glyphosate are attributed to upstream raw material supply constraints, particularly due to environmental compliance issues affecting production [20][21]. - The company maintains strong relationships with suppliers, ensuring stable production despite raw material shortages [21]. - The overall capacity utilization is at historical highs, contributing to improved profit margins due to price increases [21]. - The agricultural industry is expected to stabilize in 2025, with a positive outlook for the pesticide sector as inventory levels normalize and demand increases [22][23]. - The company is optimistic about its performance in 2025, driven by strategic operational improvements and new product launches [24]. Summary by Sections 1. Basic Company Information - Jiangsu Fengshan Group operates in three main segments: pesticides, new energy electronic chemicals, and advanced materials [19]. 2. Key Issues Discussed - Recent price trends for chlorpyrifos and glyphosate, with chlorpyrifos priced around 4.1 and glyphosate at approximately 50,000 to 52,000 per ton, are discussed [20]. - The impact of raw material supply constraints on production and pricing is emphasized [20][21]. 3. Future Industry Outlook - The pesticide industry is cyclical, with expectations for recovery in 2025 as inventory levels are addressed and demand increases [22][23]. - The company is focused on enhancing its operational strategies to boost performance in the upcoming year [24].