Financial Performance - In the first half of 2025, the company achieved a sales revenue of CNY 2.452 billion, a year-on-year increase of 6.69% [3] - Net profit reached CNY 269 million, reflecting a significant year-on-year growth of 747.13% [3] - The gross profit margin was 26.13%, up by 8.11% compared to the previous year [3] - Accounts receivable decreased by 8.01% to CNY 599 million [3] - The debt-to-asset ratio improved to 47.78%, down by 11.75% year-on-year [3] Key Drivers of Performance - Core products saw both volume and price increases, with strong market demand for key products such as Mancozeb, Chlorothalonil, Abamectin, and Methomyl [3] - The "Safety Cushion Resilience Plan" effectively controlled costs and improved efficiency through optimized production processes and supply chain management [4] - Successful expansion into overseas markets, particularly in Brazil, where the company obtained several product registrations [4] - Enhanced capacity utilization and operational efficiency due to improved market conditions and internal management [4] Product Contribution - The agricultural pesticide segment generated CNY 2.199 billion in revenue, a 4.63% increase year-on-year, with a gross margin of 26.45% [6] - The veterinary medicine segment reported revenue of CNY 229 million, a growth of 27.73% year-on-year, with a gross margin of 21.66% [6] - Specific product performance included: - Agricultural fungicides: CNY 1.240 billion in revenue, gross margin of 33.77% [6] - Agricultural insecticides: CNY 748 million in revenue, gross margin of 24.32% [6] - Agricultural herbicides: CNY 208 million in revenue, with a decrease in gross margin by 7.47% [6] Investment and Market Outlook - Investment income increased significantly, primarily from the investment in Jiangsu Xinhai Agricultural Chemical Co., Ltd. [7] - The price of Mancozeb has risen approximately 20% since January 2025, with strong demand in Brazil, where the product is crucial for soybean disease management [8] - The company expects continued growth in demand for Mancozeb, with import volumes in Brazil nearly doubling in 2024 to 88,000 tons [8] Strategic Initiatives - The company is focusing on enhancing brand influence and expanding overseas operations, with significant revenue from Brazil (CNY 200 million) and the U.S. (over CNY 70 million) in the first half of 2025 [11] - The implementation of the "One Certificate, One Product" policy is anticipated to benefit the company due to its extensive registration resources [12] - Future plans include improving production quality, expanding market presence, and enhancing technological innovation [18]

Investment Rating - The report maintains an "Overweight" rating for the agricultural chemicals industry [1]. Core Viewpoints - The China Pesticide Industry Association has initiated a three-year "Rectification and Governance" action to address issues such as hidden additives, illegal production, and disorderly competition in the pesticide industry. This initiative aims to improve market order, enhance product quality, and strengthen compliance awareness among enterprises by the end of 2027 [3][4]. - The central government has shown a strong commitment to combating "involution" in the industry, emphasizing the need for self-discipline and the elimination of low-price competition. This includes the introduction of a new growth plan for the petrochemical and chemical industries [6][7]. - The pesticide industry is undergoing a structural optimization due to stricter environmental regulations, with a shift towards green, clean, and low-carbon production. The market is expected to see a rise in the use of high-efficiency, low-risk new chemical pesticides and biological pesticides, while phasing out older, more toxic products [8][9]. Summary by Sections Section 1: "Rectification and Governance" Action - The action prohibits the addition of hidden ingredients or unregistered active ingredients in products and aims to establish a credit information platform for pesticide companies [4][5]. - Companies are required to enhance quality control and resist using low-quality raw materials, while also promoting the improvement of product quality standards [5]. Section 2: Government Initiatives - The central government has frequently addressed the issue of "involution," indicating a strong desire to regulate industry competition and promote the exit of inefficient capacities [6][7]. - The Ministry of Industry and Information Technology is set to introduce a growth plan for key industries, including petrochemicals and chemicals, to optimize supply and eliminate outdated production capacities [7]. Section 3: Industry Trends - The pesticide industry is experiencing a shift towards cleaner production methods, with policies aimed at reducing pesticide usage and promoting sustainable practices [8][9]. - The market concentration in the pesticide production sector is expected to increase, with a focus on green development and the exit of non-compliant small enterprises [9].

Core Viewpoint - The Chinese pesticide industry is launching a three-year "Rectification and Governance" action to address issues such as hidden additives, illegal production, and disorderly competition, aiming for significant improvements by the end of 2027 [1][2]. Summary by Sections Overall Requirements and Goals - The action is guided by Xi Jinping's thoughts and aims to rectify industry chaos through self-discipline, standard improvement, and law enforcement collaboration, promoting high-quality development [2]. Key Tasks - **Prohibition of Hidden Additives**: Companies must comply with regulations regarding raw material procurement and maintain traceable sales records. A "white list" for suppliers is encouraged [3]. - **Detection Standards**: Experts will develop standards for detecting hidden components to support market inspections [4]. - **Integrity Evaluation**: Companies' compliance with regulations will be included in a credit evaluation system, and a credit information platform will be established [5]. - **Combat Illegal Production**: Companies should avoid sourcing from illegal production channels and cooperate with authorities for enforcement actions [6]. - **Reporting Mechanism**: A dedicated email for reporting illegal activities has been established, with rewards for verified reports [6]. - **Quality Control**: Companies must resist using unregistered low-quality raw materials and work on improving quality standards for key products [7]. - **Resisting Price Undercutting**: Companies are urged to avoid selling below cost and to innovate to enhance product quality and market competitiveness [8][9]. - **Industry Competition Norms**: Specific competition norms will be developed for products facing severe internal competition to curb malicious practices [10]. Support Measures - **Organizational Coordination**: A special task force will be established to oversee the action [11]. - **Standard System Improvement**: The association will work on developing relevant standards and promoting them to national and industry standards [11]. - **Social Supervision**: A four-party mechanism involving government, associations, enterprises, and operators will be established for active supervision [12]. - **Public Awareness**: Efforts will be made to educate the public and industry on the importance of compliant pesticide use [13].

1. Reported Industry Investment Rating - No information provided 2. Core View of the Report - The company's performance in the first half of 2025 increased year - on - year due to the rise in sales volume and price of some products and the effectiveness of cost - reduction and efficiency - improvement measures. The supply - demand situation of some products in the pesticide industry has improved, but the competition for many pesticide products remains fierce and prices are still low, so the industry development trend needs close observation [20] - The company is optimistic about the future development of glufosinate - ammonium and refined glufosinate - ammonium. The market demand for refined glufosinate - ammonium will continue to grow, and the company will expand its market share [22] - The company is positive about the market prospects of chlorantraniliprole and is building production facilities [23] 3. Summary by Relevant Catalogs 3.1 Research Basic Situation - The research object is Lier Chemical, belonging to the pesticide and veterinary medicine industry. The reception time was July 25, 2025. The listed company's reception staff included Deputy General Manager and Board Secretary Liu Jun, and Director of the Board Office and Securities Affairs Representative Jin Yongheng [16] 3.2 Detailed Research Institutions - The research institutions include securities companies such as Changjiang Securities, CITIC Securities, and Industrial Securities, and fund management companies such as Huatai - PineBridge Fund, China Europe Fund, and Shibei Investment, along with their relevant personnel [17] 3.3 Main Content Data - **Measures to improve performance**: Ensure the completion of key projects on schedule, optimize existing process technologies, strengthen cooperation with strategic customers, establish international trade subsidiaries, develop the formulation business, increase R & D investment, and ensure safety production [21] - **Glufosinate - ammonium price trend**: The company is optimistic about the future of glufosinate - ammonium and refined glufosinate - ammonium. Although the price is falling, the market demand is growing, and the company will expand its market share [22] - **Refined glufosinate - ammonium project**: The 20,000 - ton/year enzymatic refined glufosinate - ammonium project in Hunan Jinshi has been put into production and is operating normally. The company is accelerating the registration and market layout of refined glufosinate - ammonium overseas [22] - **International market plan**: Strengthen cooperation with strategic customers, establish international trade subsidiaries, develop the international formulation business, and build a market intelligence network in core global markets [22] - **Cyanide project in Jingzhou Base**: The project is in the preliminary stage, and the specific situation is subject to the approval of the company's board of directors [22] - **Chlorantraniliprole project**: The company is optimistic about its market prospects. The production facilities (including key intermediates) are under construction [23] - **Change of controlling shareholder and actual controller**: The company is notified by the controlling shareholder, and the matter needs to go through a series of operations and state - owned asset approval processes. The company will disclose information as required [24]

Core Viewpoint - The company has reported strong performance in the first half of 2025, driven by increased sales and prices of certain products, as well as cost reduction and efficiency improvements. However, the competitive landscape in the pesticide industry remains challenging, necessitating close monitoring of industry trends [2][11]. Group 1: Company Performance - The company's revenue for Q1 2025 reached 2.086 billion, a year-on-year increase of 49.99%, while net profit rose to 153 million, up 219.9% year-on-year [11]. - The company aims to enhance performance through timely completion of key projects, optimization of existing processes, and strengthening strategic customer collaborations [3]. Group 2: Market Outlook - The company is optimistic about the future of glyphosate and refined glyphosate, anticipating continued market demand growth despite ongoing industry competition [4][6]. - The refined glyphosate project in Hunan has commenced production, with normal operational conditions reported [5]. Group 3: International Expansion - The company plans to establish international trade subsidiaries to accelerate product registration and expand local marketing channels, while also enhancing the role of its formulation division in international markets [7]. Group 4: Future Projects - The company is actively working on the cyanide project at the Jingzhou base, which is currently in the preliminary stages pending board approval [8]. - The company is optimistic about the market prospects for chlorantraniliprole, with ongoing efforts in market layout and production process optimization [9]. Group 5: Shareholder Changes - The company is in communication with its controlling shareholder regarding potential changes, which will require a series of operations and state-owned asset approvals [10].

Group 1: Company Performance - The company's performance in the first half of 2025 improved due to increased sales and prices of certain products, as well as cost reduction and efficiency gains [2] - The agricultural pesticide industry is showing signs of improvement in supply and demand, although competition remains fierce and prices are still low [2] Group 2: Future Strategies - Key measures to enhance performance include completing key projects on time, optimizing existing processes, improving product quality, and reducing production costs [3] - The company plans to strengthen strategic customer cooperation, accelerate new product registration, and establish an international trade subsidiary to expand local marketing channels [3] Group 3: Market Outlook - The company remains optimistic about the future of glyphosate prices, anticipating continued market demand despite intense competition [3] - The 20,000 tons/year enzymatic glyphosate project in Hunan has been put into production and is operating normally [3] Group 4: International Expansion - The company aims to enhance strategic customer cooperation, expedite new product registration, and develop international formulation business [4] - Plans include building a market intelligence network in key global markets such as North America and South America to inform future product strategies [4] Group 5: Project Developments - The cyanide project at the Jingzhou base is still in the preliminary stages, pending board approval [4] - The company is optimistic about the market prospects for chlorantraniliprole and is currently optimizing production processes [4]

Summary of Glyphosate and Glyphosate Ammonium Industry Conference Call Industry Overview - The glyphosate price has been continuously rising due to multiple factors, currently priced between 24,800 to 25,000 CNY per ton, with some intermediaries quoting as high as 26,000 CNY per ton. It is expected to reach 27,000 CNY per ton by the end of the year and maintain stability at that level [1][8] - Inventory has significantly decreased from over 80,000 tons to over 40,000 tons, further supporting price increases [1] - Domestic glyphosate manufacturers maintain a high operating rate of over 85%, although some have experienced temporary shutdowns or production cuts due to product specification adjustments and environmental factors [1][6] Demand and Supply Dynamics - The demand for glyphosate is steadily increasing, with domestic and international orders robust, and manufacturers' orders extending into late September [1][3] - Bayer's ongoing glyphosate cancer litigation has led to substantial capacity reductions, impacting overseas operating rates and indirectly driving up glyphosate prices [1][9] - Glyphosate ammonium prices are weakening due to differences in target customer groups and relatively low domestic and international production capacity, leading customers to stockpile glyphosate instead [1][10] Production and Capacity - Domestic glyphosate production capacity and output vary among manufacturers, with some experiencing production cuts due to environmental regulations and unmet customer specifications [6][7] - Specific production capacities and outputs include: - Xingfa Group: 250,000 tons capacity, 200,000 tons output - Jiangshan: 80,000 tons capacity, 60,000 tons output - Hebei Chengxin: 60,000 tons capacity, 40,000 tons output - Fuhua Tongda: 160,000 tons capacity, 130,000 tons output [6] Future Price Trends - The current price range for glyphosate suggests potential for further increases, with foreign market prices approximately 28,000 CNY, indicating room for domestic price growth [8] - The rapid promotion of genetically modified crops in China, with an expected growth rate of around 7%, is anticipated to significantly increase glyphosate demand [4][21] Industry Collaboration and Pricing Strategies - Domestic glyphosate companies are interested in collaborative pricing, but differing cost structures and individual interests hinder consensus [4][14] - Leading companies in terms of profit margins include: - Lier: approximately 3,000 CNY per ton - Xingfa: approximately 2,000 CNY per ton - Hebei Chengxin: approximately 1,300 CNY per ton [15] Global Market and Regulatory Impact - The global demand for glyphosate is primarily driven by its use in genetically modified crops, with about 60% of usage in this sector [20] - The impact of Brazil's increased tariffs on glyphosate is limited, as their procurement volume is not substantial [19] Future Outlook - If glyphosate is classified as a carcinogen, glyphosate ammonium could become a primary beneficiary, with many countries increasing its production [26] - The potential for glyphosate ammonium to replace glyphosate is limited by its mechanism of action and crop resistance, but it has advantages in environmental safety [27][28]

Group 1: Company Performance - The company's performance in the first half of 2025 improved due to increased sales and prices of certain products, as well as cost reduction and efficiency gains [2] - The overall agricultural pesticide industry is showing signs of improvement, with some companies reporting better performance, although competition remains fierce and prices are still low [2] Group 2: Future Strategies - The company plans to enhance performance by completing key projects on time, optimizing existing processes, improving product quality, and reducing production costs [3] - Strengthening strategic customer cooperation and accelerating the registration and development of new products are also key measures [3] Group 3: Market Outlook - The company remains optimistic about the future of glyphosate prices, despite current market competition, and aims to steadily expand market share [3] - The market for refined glyphosate is expected to grow as more companies obtain product registrations and improve production technologies [3] Group 4: Project Developments - The 20,000 tons/year enzymatic refined glyphosate project in Jinshi, Hunan, has been put into production and is operating normally [3] - The company is actively constructing production facilities for chlorantraniliprole, with significant market layout efforts already made [3] Group 5: Shareholder Changes - The company is in communication with its controlling shareholder regarding potential changes, which will require a series of operations and government approvals [3] - The second-largest shareholder's reduction in holdings is primarily based on investment return considerations, and updates will be disclosed according to regulations [4]

Core Viewpoint - Lier Chemical is expected to significantly increase its profitability in the first half of 2025, with a projected net profit of 265 million to 275 million yuan, representing a year-on-year growth of 185.24% to 196.00% due to rising prices and sales of its core product, glyphosate, alongside cost optimization efforts [1][2]. Group 1: Financial Performance - In 2023, Lier Chemical's revenue was 7.851 billion yuan, a decrease of 22.55% year-on-year, and the net profit was 604 million yuan, down 66.68% [2]. - In 2024, the company reported revenue of 7.311 billion yuan, a decline of 6.88% year-on-year, with a net profit of 215 million yuan, a drop of 64.34% [2]. - The company anticipates a strong recovery in 2025, with a significant increase in net profit driven by improved market conditions and strategic initiatives [2][3]. Group 2: Product and Market Dynamics - The price of glyphosate remains low, but the price of Lier Chemical's other core product, glufosinate, has rebounded from 23,500 yuan per ton in April 2025 to 25,500 yuan per ton by July 7, 2025, marking an increase of 8.5% [3]. - The company has expanded its market share in key regions such as Brazil and Argentina through a dual strategy of targeting large clients and overseas registrations [3]. - Domestic demand for glufosinate is rapidly increasing due to the promotion of genetically modified crops, supporting the company's production capacity growth [3]. Group 3: Capacity Expansion and Strategic Initiatives - Lier Chemical has established seven production bases in China, enhancing its competitive edge and ensuring a stable global supply chain [1][4]. - The company holds over 50% market share in glufosinate domestically and approximately 30% globally, benefiting from economies of scale [4]. - As of 2024, Lier Chemical's production capacities include 86,300 tons for active ingredients, 81,200 tons for formulations, and 123,500 tons for chemical products, with respective year-on-year growth rates of 43.4%, 36.2%, and 50.6% [4]. - The company is also pursuing acquisitions to further expand its industry chain, including a proposed acquisition of Shandong Huimeng Biotechnology Co., Ltd. [5].

Investment Rating - The industry investment rating is maintained as "Increase" [5] Core Viewpoints - The "anti-involution" policy is expected to lead to a recovery in the sub-sectors of the basic chemical industry [2] - The geopolitical situation in the Middle East has caused fluctuations in oil prices, with Brent crude oil returning to the range of $60-70 per barrel [1] - The agricultural chemical sector is anticipated to see a recovery in demand due to the "anti-involution" policy and environmental safety regulations [3] Summary by Sections Oil and Gas Sector - Brent crude oil prices peaked at $78.85 per barrel during the escalation of the Israel-Iran conflict but have since returned to $68.30 per barrel as of July 4, indicating a reversion to fundamental pricing [1] - Global oil demand is projected to increase by 720,000 barrels per day according to IEA, while OPEC anticipates a supply increase of 1.3 million barrels per day, leading to a supply-demand imbalance [1] Basic Chemical Sector - The central government has emphasized the need to eliminate low-price disorderly competition, which is expected to accelerate the exit of outdated production capacity in the chemical sector [2] - The growth rate of ongoing projects in the basic chemical sector is projected to fluctuate, with a decline expected in Q1 2025 [2] Agricultural Chemical Sector - China's total pesticide production is expected to increase by 24% in 2024, with significant growth in herbicides and insecticides [3] - Recent incidents have impacted the supply of certain products, leading to price increases of 87% and 35% for specific chemicals [3] - The ongoing litigation involving Bayer and glyphosate may significantly affect the supply and pricing of glyphosate and its alternatives [4]