Investment Rating - The report rates the pesticide industry as "Outperform the Market" [1][5] Core Insights - The Chinese pesticide industry is expected to transition from "Me too" to "Me better" in terms of innovation and product development [1][2] - The global pesticide market is projected to reach approximately $77.2 billion in 2024, with a compound annual growth rate (CAGR) of 2.35% over the next decade [1][13] - Non-patented pesticides dominate the market, accounting for 93% of the global pesticide market share, while patented pesticides hold only 7% [1][14] Summary by Sections Pesticide Market Overview - The global pesticide market is expected to be approximately $77.2 billion in 2024, with agricultural pesticides making up $70.1 billion and non-agricultural pesticides $7.1 billion [1][13] - The market share of herbicides, fungicides, and insecticides in the global crop protection market is 47.20%, 24.96%, and 24.97% respectively [1][13] New Pesticide Development Challenges - The difficulty of developing new pesticides has increased significantly, with the average cost of bringing a new pesticide to market now around $300 million and taking approximately 12 years [1][45] - The number of new active ingredients introduced globally every decade has decreased, indicating a growing challenge in pesticide innovation [1][43] China's Pesticide Industry Strength - China has become the world's largest pesticide producer and exporter, with nearly 70% of global active ingredient production and 90% of its production being exported [2][2] - From 2020 to 2024, China accounted for 51.61% of the new pesticides developed globally, establishing itself as a key player in pesticide innovation [2][2] Investment Recommendations - The report recommends focusing on domestic pesticide companies that are actively advancing new pesticide development, including: - Yangnong Chemical: Holds 12 new pesticides with complete independent intellectual property rights [3][4] - Lier Chemical: Promoting patented plant immune activator [3][4] - Limin Chemical: Collaborating with BASF to apply AI in pesticide development [3][4] - Jiangshan Chemical: Preparing for the industrialization of a new herbicide [3][4] Key Company Profit Forecasts - Yangnong Chemical: Rated "Outperform the Market" with an estimated EPS of 3.33 in 2025 and a PE ratio of 19.7 [4] - Lier Chemical: Rated "Outperform the Market" with an estimated EPS of 0.62 in 2025 and a PE ratio of 21.0 [4] - Limin Chemical: Rated "Outperform the Market" with an estimated EPS of 1.26 in 2025 and a PE ratio of 12.7 [4] - Jiangshan Chemical: Rated "Outperform the Market" with an estimated EPS of 1.41 in 2025 and a PE ratio of 16.1 [4]

Group 1: Company Performance - In 2024, the company achieved a total operating revenue of 4.236 billion yuan, representing a year-on-year increase of 9.51%, and a net profit attributable to shareholders of 266 million yuan [1] - For Q1 2025, the company reported an operating revenue of 1.033 billion yuan, up 18.50% year-on-year, and a net profit of 79 million yuan, reflecting a significant growth of 50.94% [1] - The company's performance indicates that its strategic layout has begun to yield benefits, showcasing stronger development capabilities [1] Group 2: Agricultural Chemicals Market - The global pesticide market is showing signs of recovery in 2024, despite an expected contraction of 6.3% in the overall industry [2] - China, as the world's largest pesticide exporter, saw a 30.0% year-on-year increase in the export volume of herbicides, insecticides, and fungicides, totaling approximately 2.814 million tons [2] - The price of the protective fungicide, Bacillus subtilis, has rebounded by 66.67% since May 2024, significantly exceeding early 2024 levels [2] Group 3: Product and Innovation Development - The company has established itself as a "hidden champion" in the plant protection sector, with core products like Bacillus subtilis, 2,4-D, and pyraclostrobin achieving world-class production scale and quality [3] - The company is building a comprehensive product matrix covering the entire pesticide industry chain, having completed trial production of over 50 formulation products during the reporting period [3] - In 2024, pesticide products contributed 3.602 billion yuan in revenue, with insecticides and herbicides generating 1.465 billion yuan and 1.929 billion yuan, respectively, reflecting year-on-year growth of 23.39% and 2.64% [2][3] Group 4: Research and Development - The company has invested 147 million yuan in R&D, maintaining a stable investment level to promote the development of new pesticide varieties [4] - The company has synthesized over 3,000 compounds and identified multiple high-potential candidate compounds during the reporting period [4] - The company has achieved initial results in new pesticide creation, with its self-developed pesticide receiving export registration and forming a global strategic partnership for further development [4]

Core Viewpoint - Taihe Co., Ltd. officially listed on the Shenzhen Stock Exchange's Growth Enterprise Market on April 11, 2023, and aims to become a leading player in the agricultural chemical industry by focusing on product excellence and innovation [1][2]. Group 1: Company Overview - Taihe Co., Ltd. transitioned from an import-export trading company to a manufacturer, emphasizing technology and research and development as key components of its international growth strategy [2][3]. - The company has established long-term strategic partnerships with multinational corporations such as Syngenta, Dow, and UPL, with exports covering major global markets including South America, North America, Southeast Asia, and Europe [2][3]. Group 2: Core Products and Technologies - Taihe Co., Ltd. holds a leading position in three core products: Bacillus subtilis, Pyraclostrobin, and 2,4-D, with an average annual capacity utilization rate exceeding 100% from 2021 to 2023 [4]. - The company has mastered key technologies such as ammonia oxidation, chlorination, hydrogenation, and fluorination, which support its industry-leading status in core products [4]. Group 3: Innovation and Environmental Focus - The company is committed to integrating innovative technology into its products to promote greener and more efficient agricultural practices, aligning with national low-carbon development goals [5]. - Taihe Co., Ltd. has made significant advancements in the production process of 2,4-D, eliminating unpleasant odors and enhancing environmental friendliness, which has improved product acceptance [7]. Group 4: Market Position and Strategy - In a challenging market environment characterized by price wars, Taihe Co., Ltd. has maintained a profit margin of 5%, above the industry average of 3%, by leveraging technological and managerial efficiencies [8]. - The company is transitioning from a "boss strategy" to a "team strategy," restructuring its operations into three business units: plant protection, functional chemicals, and new energy materials [9]. Group 5: Future Prospects - Taihe Co., Ltd. is focused on the development of new pesticides, with a promising product, cyclopropyl fluorochloride, expected to enter the global market by mid-2024 [11]. - The company aims to expand its business scope and industry position significantly through the commercialization of innovative products, potentially becoming the first Chinese company to achieve global sales of a new compound [11].