Core Viewpoint - The pesticide industry is experiencing a prolonged downturn, but recent actions such as the "Zhengfeng Zhijuan" initiative may help reverse the trend and improve market conditions [1][2][4]. Group 1: Industry Actions and Regulations - The China Pesticide Industry Association has launched a three-year "Zhengfeng Zhijuan" action to address issues like hidden additives, illegal production, and chaotic competition in the pesticide industry [1][2]. - Key tasks include prohibiting the addition of unregistered active ingredients, cracking down on illegal production, and resisting low-price competition [2]. Group 2: Market Dynamics - Since Q4 2022, the global pesticide market has entered a destocking phase, with domestic production capacity being released, leading to a mismatch in supply and demand [3][4]. - As of July 27, the China Agricultural Chemicals Price Index was at 75.35 points, showing a year-on-year decline of 0.44% but a month-on-month increase of 0.33% [3]. Group 3: Export Demand and Recovery Potential - In the first half of 2025, China's exports of herbicides, insecticides, and fungicides increased by 14%, 32%, and 24% year-on-year, respectively, with major markets including Brazil, the USA, and Thailand [3]. - Certain pesticide products, such as glyphosate and chlorpyrifos, are expected to see a rebound in demand, aiding in the recovery of industry profitability [4]. Group 4: Investment Recommendations - Recommended stocks include Yangnong Chemical, Limin Co., and Xingfa Group, which are leaders in the pesticide sector [5]. - Beneficiary stocks include Jiangshan Co., Lier Chemical, and Runfeng Co., among others, which are positioned to gain from the industry's recovery [5].

Investment Rating - The investment rating for the chemical industry is "Positive" (maintained) [1] Core Insights - The report highlights that the agricultural chemical industry is undergoing a "Three-Year Action Plan" aimed at improving market order and curbing excessive competition, which is expected to enhance profitability and industry conditions by 2027 [4][5] - The global agricultural chemical market has entered a destocking phase since Q4 2022, with domestic production capacity being released, leading to a recovery in prices for certain agricultural chemicals [5] - The report identifies several key companies that are expected to benefit from the industry's recovery, including Yangnong Chemical, Limin Co., and Xingfa Group, among others [5] Summary by Sections Industry Trends - The agricultural chemical market has seen a decline in prices since 2021 due to supply-demand mismatches, but recent data indicates a potential rebound in prices for key products like glyphosate and chlorpyrifos [5][53] - Exports of herbicides, insecticides, and fungicides from China have shown significant year-on-year increases of 14%, 32%, and 24% respectively in the first half of 2025 [11][16] Regulatory Developments - The "Three-Year Action Plan" initiated by the China Pesticide Industry Association aims to address issues such as illegal production and excessive competition, with specific measures to enhance product quality and compliance [4][56] Company Performance - The report provides a forecast for various companies, indicating that Yangnong Chemical is expected to see a profit growth of 17.3% in 2025, while Limin Co. is projected to have a significant profit increase of 460.5% [56][58] - The report also lists companies with strong market positions and potential for growth, including Jiangshan Co. and Helilong [5][56]