Summary of the Agricultural Pesticide Industry Conference Call Industry Overview - The agricultural pesticide industry is currently experiencing a contraction in supply and rising costs due to environmental inspections, safety checks, and raw material price increases. The China Pesticide Industry Association has called for a reduction in internal competition, which may impact future supply-demand dynamics and cost control [1][2][20]. Key Trends and Highlights - The agricultural pesticide sector has seen a significant year in terms of prices, demand, and stock market performance, becoming a key focus in the chemical investment landscape. After four years of declining price indices, a resurgence has been noted [2][20]. - The market can be categorized into four main lines: 1. Supply-side contraction due to accidents and stricter inspections 2. Rising costs from raw material price increases 3. Demand growth driven by agricultural trends and pest issues 4. Overcapacity in the industry [3][20]. Specific Product Insights - **Chlorantraniliprole (康宽)**: Following the expiration of its patent, domestic production capacity has increased, leading to price fluctuations. Prices peaked at nearly 300,000 yuan due to an incident in Shandong but have since decreased to 245,000 yuan [5][20]. - **Imidacloprid (吡虫啉)**: Prices have rebounded from 66,000 yuan to around 70,000 yuan due to rising raw material costs, with expectations for further increases driven by seasonal demand in South America [9][20]. - **Acetochlor (烯草酮)**: Experienced a significant price increase due to a production halt, with prices rising from 80,000-85,000 yuan to over 100,000 yuan, indicating the impact of supply disruptions [11][20]. - **Isopropylamine (异丙甲草胺)**: Expected to benefit from raw material supply constraints and demand for alternatives to Ethyl Acetate, showing promising market prospects [12][20]. Trade Dynamics - Trade between China and India in the pesticide sector is on the rise, with significant increases in demand and inventory replenishment observed. The production of orange products is expected to grow by 15-20% in 2025 [18][20]. Cost Implications - Rising raw material costs have significantly impacted the pesticide industry, with examples such as borohydride prices increasing from 78,000 yuan to 92,000 yuan due to anti-dumping tariffs [19][20]. - The cost of key raw materials like diethylhexylamine has risen due to environmental inspections and factory shutdowns, further driving up overall production costs [16][20]. Regulatory Developments - The China Pesticide Industry Association has initiated a campaign against internal competition, focusing on strict management of highly regulated pesticides and implementing traceability for key products [33][34][20]. - Future product standards are expected to be revised to promote high-quality development, with an emphasis on improving impurity limits for major pesticides [35][20]. Market Outlook - The agricultural pesticide market is expected to maintain a positive outlook, with several products showing strong demand and price resilience. The overall supply-demand balance remains a critical factor to monitor [20][30].

Investment Rating - The report gives a "Strong Buy" rating for Hunan Haili, with a target price of 9.9 CNY per share [2][11]. Core Viewpoints - Hunan Haili is a leading company in the carbamate pesticide industry, leveraging its strong R&D capabilities and abundant resources to maintain a dominant market position. The company is expected to benefit from the recovery of the pesticide industry and the expansion of its unique product, Methyl Pyrimidine Phosphorus [7][9][10]. - The report anticipates significant revenue growth for the company, projecting revenues of 2,471 million CNY in 2024, increasing to 4,775 million CNY by 2027, with a compound annual growth rate (CAGR) of 34% from 2024 to 2027 [3][11]. Financial Summary - **Revenue Forecast**: - 2024: 2,471 million CNY - 2025: 3,243 million CNY (31.3% YoY growth) - 2026: 4,016 million CNY (23.8% YoY growth) - 2027: 4,775 million CNY (18.9% YoY growth) [3][11] - **Net Profit Forecast**: - 2024: 265 million CNY - 2025: 368 million CNY (38.6% YoY growth) - 2026: 502 million CNY (36.5% YoY growth) - 2027: 633 million CNY (26.0% YoY growth) [3][11] - **Earnings Per Share (EPS)**: - 2024: 0.47 CNY - 2025: 0.66 CNY - 2026: 0.90 CNY - 2027: 1.13 CNY [3][11] - **Valuation Ratios**: - Price-to-Earnings (PE) Ratio: Expected to decrease from 15 in 2025 to 6 in 2027 - Price-to-Book (PB) Ratio: Expected to decrease from 1.3 in 2025 to 1.0 in 2027 [3][11]. Company Overview - Hunan Haili is recognized as the first listed company in Hunan Province, with a strong backing from the Hunan Provincial State-owned Assets Supervision and Administration Commission [15][24]. - The company has established a robust production capacity of 28,000 tons for carbamate pesticides, with additional capacity being released from its Ningxia base [7][9][10]. Industry Insights - The carbamate pesticide sector is expected to experience a recovery due to the increasing demand for high-toxicity traditional pesticides, which are currently in short supply [7][9][45]. - The global pesticide market has shown a consistent growth trend, with an average annual growth rate of approximately 4.2% from 2017 to 2023, driven by the rising global population [46][49].