Lier Chemical (002258): The price of glufosinate continued to fall, and the 1H19 performance was in line with expectations

Lier Chemical (002258): The price of glufosinate continued to fall, and the 1H19 performance was in line with expectations

1H19 results are in line with our expected 1H19 results: revenue 20.

500 million, ten years +12.

68%; net profit attributable to mother 1.

6 trillion a year -38.

80%, blacks earn 0.

30 yuan, in line with expectations.

We believe that the 1H19 company’s revenue growth is mainly due to the expansion of the glufosinate production and the amount of flufenoxamine put into operation.

Previously the price of glufosinaldehyde decreased by 23% per degree, resulting in a decrease in gross profit margin2.

86PCT to 29.

twenty one%.

In terms of expense ratio, the sales expense ratio / management + R & D expense ratio / financial expense ratio were increased by 0 respectively.

02/2.

42/2.

07PCT, a crack in the increase; the increase in research and development costs is mainly due to the increase in the company’s investment in research and development, and the financial costs are caused by the increase in discount 成都桑拿网 indexes and exchange losses.

For subsidiaries, Jiangsu Qida’s net profit decreased by 14.
.

At 7%, the net profit of Lier Crop / Bide Biochemical increased by 2 respectively.

4% / 213%, we believe that the growth of Bide Biochemical’s profit growth is mainly due to insufficient supply of pentachlor doped, leading to the price increase of fluroxypyr.

The company expects the net profit attributable to the mother to be 1 to 9 months.

7-2.

9 trillion, corresponding to 3Q19 performance of 0.

07-1.

3.3 billion.

Development trend Supply expansion, export growth faster than expected, glufosinate price bottom shock.

The price of glufosinate has been 18 since October 18’s high.

75 million / ton, continued to drop to the current 11.

50,000 tons / ton.

We believe that the core reason is the expansion of supply. The 7,000-ton capacity of Lier Guang’an Base was put into operation in 4Q18, Shandong Yisheng’s capacity increased, and the industry’s periodic excess capacity.

In addition, in the export of glufosinate, the 1H19 industry exported a total of 4,025 tons, each 1% extension, of which India and the United States offset.

Looking forward to 2H19, we expect the price to fluctuate at the bottom, but at the same time, the downside is limited.

From the perspective of cost, the format technology currently widely used in China, we judge that the cost is more than 10 thousand tons / ton (excluding tax), so there is limited room for downward price.

Expansion + integrated support, Lier strengthened the leading position.

The company’s highest glufosinaldehyde formaldehyde expansion rate, plans to put one into production in Guang’an.

In addition, the company formulated an integrated layout of the industrial chain, and set up a subsidiary in cooperation with Sancaitang; at the same time, Guang’an Base MDP 1.

5Accelerated construction in the early stage is expected to be put into production within this year.

We believe that companies with an integrated industrial chain layout like Lier will benefit more from future industry competition.

Earnings Forecasts and Estimates Due to intensified competition in the glufosinate industry and accelerated price declines, we lower our net profit for 2019 and 2020 by 14% and 9% to 4.

200 million and 7.
10,000 yuan.
The current contradiction corresponds to 14 times the 2019 P / E ratio and 8 2020 P / E ratio.

We maintain our Outperform rating, but we lower our target price by 13% to 14 due to a higher-than-expected price reduction of glufosinate.

2 yuan, corresponding to 17 times the 2019 price-earnings ratio and 10 2020 price-earnings ratio, there is 25% upside from the current consensus.

Risks Guang’an put into production more than expected, the price of glufosinate decreased, and other environmental and safety risks.