Yangnong Chemical: Dicamba welcomes the growth window period buy rating

■The global pesticide market is expected to usher in a recovery, and major overseas giants have entered a restocking cycle: historically, oil prices have been highly correlated with the growth rate of the global pesticide market.
At present, oil prices are in an upward cycle, and global food prices are showing signs of rebound.
The global pesticide market is promising
.
The stocks of international giants are historically low, and the replenishment of stocks has driven China's monthly export growth rate of pesticides soaring.
According to statistics from the Bureau of Statistics, it has reached over 20%
.
■Environmental protection is expected to become a main line for the improvement of the pesticide boom: the 2016 environmental protection curtain has been fully opened, the central government has sent three environmental protection inspection teams, and the large pesticide province of Jiangsu and Shandong has launched the "into the park" project, environmental protection is fully tightened, and pesticide production is small.
And heavy pollution intermediates are under-started, and the price index has risen significantly
.
In 2017, the central supervision was upgraded to full coverage, and local governments further rectified and reduced chemical parks.
Environmental protection drive is expected to become the long-term main line of pesticides
.
■The company's production of pyrethrin and glyphosate is leading domestically, and the price increase has brought huge performance flexibility: According to the announcement, the company's pyrethroid output is 10,000 tons, which is the only domestic pyrethroid leader in the whole industry chain, and the market share of sanitary pyrethroid is 70% , Glyphosate has a capacity of 30,000 tons
.
The improvement of supply and demand will generally increase the price of pesticides, and the whole industry chain will benefit greatly
.
Glyphosate has increased by 6000 yuan/ton since the end of last year, and the prices of kungfu pyrethroid and bifenthrin have increased by nearly 30%.
As the company's long-term monotonic price is gradually completed, the second quarter is expected to release performance flexibility
.
■Dicamba has entered a growth window, and 20,000 tons of new production capacity will become the main growth point
.
EPA approved Monsanto's dicamba formulation at the end of last year to form a dicamba-tolerant crop system
.
The promotion of genetically modified seeds drove dicamba to usher in a window of growth
.
The price of dicamba is currently at the bottom and may rise in the future
.
The company currently has a production capacity of 5,000 tons, and the new production capacity of 20,000 tons is expected to become a domestic leader in 17 years.
It is expected that dicamba will become the main growth point for future performance
.
■Investment advice: the recovery of the pesticide market and the replenishment of stocks will increase demand.
Environmental restrictions on supply are expected to become the main line of the long-term domestic pesticide business.
Under the background of rising pesticide prices, the company's performance of 30,000 tons of glyphosate and 10,000 tons of pyrethroid is huge; Dicamba is expected to be completed in the middle of the year will become a new growth point
.
It is estimated that the EPS is 1.
42, 1.
95, and 2.
16 yuan in 2016-2018, corresponding to PE27/19/17
.
Give a buy-A rating
.
The 6-month target price is 58.
5 yuan
.
■Risk warning: environmental protection is relaxed, small factories resume work, and the promotion rate of dicamba is lower than expected
.