Lier Chemical Co.Ltd(002258) (002258)
Key investment points
Event: the company released the performance forecast for 2021. It is expected to realize the net profit attributable to the parent company of RMB 1.0-1.08 billion, with a year-on-year increase of 63.3-76.4%. In the fourth quarter, it is expected to realize the net profit attributable to the parent company of RMB 390-470 million, with a year-on-year increase of 98.7-139.6% and a month-on-month increase of 264.0-339.0%.
The industry boom rose, the company overcame the impact of shutdown, and its performance exceeded expectations in the fourth quarter. In the fourth quarter of 021, the rise of glufosinate market continued, with the average price of 363000 yuan / ton in the fourth quarter, up 35.4% month on month. At the same time, the upstream and downstream price transmission increased in the fourth quarter, and Chloropyridine products with high raw material cost pressure also ushered in a general rise. In terms of the company, Mianyang base basically resumed production in October, the annual product sales increased year-on-year, and the company's performance exceeded market expectations with the increase of volume and price.
The substitution of highly toxic pesticides and the promotion of transgenic technology have driven the rapid growth of demand for glufosinate. Highly toxic pesticides are gradually banned worldwide. For example, 14000 tons of paraquat will be banned in 2020. At the same time, the global GM planting area is growing steadily at a rate of about 5% per year, and the demand for glyphosate resistant crops is expected to increase simultaneously. In addition, the demand growth from glyphosate and glufosinate is also considerable. Driven by the new demand, the supply of glufosinate in 2021 is in short supply. The annual average price is 250000 yuan / ton, up 72.7% year-on-year. The latest quotation is 333000 yuan / ton. As the leader of glyphosate, the company has an existing production capacity of 15400 tons, which will fully benefit from the product boom.
The company is the leader of chlorinated pyridine pesticides, with significant integration advantages. The company is the second largest supplier of chlorinated pyridine pesticides in the world. At present, the company has a production capacity of 2800 tons of bikecao, 3000 tons of chlorpyrimidine, 1300 tons of fluorograss and 1500 tons of chlorpyrimidine. The subsidiary Hebi Secco has a production capacity of relevant intermediates to provide reliable raw material guarantee. In September, under the influence of dual control of energy consumption, the production of some enterprises was limited, the supply of chlorinated pyridine pesticides was tight, and the price rose rapidly and remained high. Under the background of stricter requirements on energy consumption and environmental protection, we judge that the profitability of the company's Chlorinated pyridine products will remain a high profit center in the future.
Relying on the moat of technical barriers, innovative companies have full growth. The company took the lead in the layout of l-glufosinate and built 3000 tons and 20000 tons of production capacity in Guang'an and Mianyang respectively. The former is expected to be put into operation in 2022. The application amount of l-glufosinate is only half of that of ordinary glufosinate, which will accelerate the upgrading. In addition, the company reserves new varieties such as oxazolidinyl ester, chlorfenoxamide and flame retardant to support the long-term development of the company.
Profit forecast and investment suggestions. By raising the profit forecast, it is estimated that the company's EPS from 2021 to 2023 will be 1.93 yuan, 2.94 yuan and 3.68 yuan respectively. As the leader of glufosinate and Chloropyridine pesticides, the company has strong R & D and engineering development capacity, rich reserve projects, strong certainty of future growth, and maintains the "buy" rating.
Risk warning: the production of projects under construction is less than expected, the price of raw materials rises sharply, and the price of main products fluctuates.
