Lier Chemical Co.Ltd(002258) (002258)
Event: on the evening of January 4, the company released the performance forecast for 2021. It is expected that the company will realize a net profit attributable to the parent company of RMB 1-1.08 billion in 2021, with a year-on-year increase of 63.34% – 76.41%. In 2021q4, the company expects to realize a single quarter net profit attributable to the parent company of RMB 388-468 million, with a year-on-year increase of 98.97% – 140.00% and a month-on-month increase of 262.62% – 337.38%.
The glyphosate market continued to improve and the company’s performance was outstanding. Glufosinate is the second largest herbicide for transgenic crops in the world with excellent performance. With the commercialization of more glyphosate resistant products and the improvement of the substitution rate of paraquat, the sales space of glyphosate will be further opened. In 2021q1-q3, affected by the epidemic situation, environmental protection and “dual control of energy consumption”, the operating rate of glufosinate industry continued to decline, which was always below 50% before October. After that, the operating rate recovered and increased to 69.5% in December. The shortage of supply has led to a sharp rise in the price of glufosinate. According to Ifind data, the ex factory price of glufosinate (95% technical drug) of the company increased from 180000 yuan / ton to 390000 yuan / ton in 2021, an increase of 116.67%, which then promoted the significant growth of the company’s performance.
The production capacity ranks first in the world, and the market share is expected to be further improved. By the end of 2020, the global production capacity of glyphosate was about 46500 tons, of which the company’s production capacity was 15400 tons / year, ranking first in the world. In 2021, the company plans 3000 t / A and 30000 T / a l-glufosinate production capacity in Guang’an and Mianyang bases respectively. BASF, the second largest producer in the world, will close its production bases in the United States and Germany in 2022, and its market share will be occupied by other enterprises. As the global leader of glufosinate market, the company has mastered the key technology of glufosinate synthesis, and is actively arranging the asymmetric synthesis process of l-glufosinate, which has strong technical barriers and market competitiveness. The market share of glufosinate products of the company is expected to be further improved in the future.
Pyridine herbicides have a solid leading position and sufficient technology and product reserves. The company is the second enterprise in the world to successfully master the integration technology of pyridine compound catalytic chlorination system after Tao Yinong, and has the largest large-scale production capacity of Chloropyridine pesticide technical drugs and preparations in China. While actively developing and optimizing projects such as glufosinate, fluconazole, propargyl fluoxamide and flumoxone, the company also carried out forward-looking research according to the company’s development strategy and the industry’s technical development direction, developed a series of new products including glufosinate, azolin oxalate, chloramphetamine benzamide and flame retardant, so as to provide projects and technical reserves for the long-term development of the company, Increase new profit growth points of the company in the future.
Profit forecast, valuation and rating: the company’s performance is in line with expectations, and we maintain the profit forecast. It is estimated that the company’s net profit attributable to the parent company from 2021 to 2023 will be RMB 1.047/11.80/1.446 billion respectively, and the corresponding EPS will be RMB 1.99/2.24/2.74/share respectively, maintaining the “overweight” rating of the company.
Risk tips: the risk of falling price of glyphosate, the risk of falling demand for pesticides, the risk that the project construction is less than expected, the risk of safety production accidents, and the risk that the output cannot be digested after large-scale expansion
