LMGF(002734)2024-11-26 06:51Summary of the Conference Call for Limin Co., Ltd. Industry Overview - The pesticide industry experienced a boom in 2021, leading to expansion among companies. However, a downturn occurred in 2022-2023 due to oversupply, impacting profits for Limin Co., Ltd. A rebound in prices and sales is expected starting in Q1 2024 [2][3]. - The net profit for Limin Co., Ltd. was approximately 300-400 million yuan before 2021, dropping to around 67 million yuan in 2022-2023, with improvements expected in the first three quarters of 2024 [2][3]. Key Points on Pesticide Market Dynamics - Downstream raw material inventory has returned to reasonable levels, with the highest destocking seen in fungicides, followed by insecticides and herbicides [4]. - Global demand for the fungicide Bacillus subtilis is about 70,000 tons, with South America, particularly Brazil, being the largest market. Currently, there are no significant new demand growth points, but inventory levels are low [5]. - A significant outbreak of soybean rust in Brazil is expected to lead to a surge in demand for Bacillus subtilis, driving prices up due to low channel inventory [6]. Competitive Landscape - The Bacillus subtilis market is concentrated in China, with Jiangsu Xinhai Company holding a significant market share and currently operating at full capacity [5][8]. - The market for the fungicide Dazomet is experiencing price increases, with good market acceptance and strong demand from South America, while supply from India is not meeting expectations [2][14]. Supply Chain and Production Insights - The current supply situation for Bacillus subtilis shows low inventory levels, with Jiangsu Xinhai Company operating at full capacity but still facing shortages [9]. - The company has a total production capacity of 45,000 tons, with production running at full capacity and some products being supplied to overseas markets [18]. Price Trends and Financial Implications - Prices for insecticides such as Abamectin and Methomyl have increased by approximately 30% since the end of last year, driven by supply-demand imbalances [22]. - The decline in grain prices is beneficial for Bacillus subtilis and Dazomet, as lower prices increase demand for traditional, effective fungicides [12]. Future Outlook - The company anticipates that if current market conditions persist, the prices of several key products will rise, positively impacting overall performance [27]. - The potential for a re-approval of Dazomet in the European market could significantly enhance demand and market dynamics [19]. Additional Considerations - The company is actively monitoring the market for potential changes in regulations and demand, particularly in Europe, which could lead to increased opportunities [19][20]. - The financial impact of depreciation from new production lines is being managed, with strategies in place to mitigate negative effects if prices remain low [25]. This summary encapsulates the key insights from the conference call, highlighting the current state and future expectations of Limin Co., Ltd. and the pesticide industry.