Items:
Red Sun (000525) issued the first phase of the employee stock ownership plan (draft) on August 7, 2018, and issued an announcement on September 26. The first phase of the employee stock ownership plan "asset management contract" was signed with the manager Yinhe Jinhui Securities Asset Management Co., Ltd., and the custodian China Merchants Bank Co., Ltd. Beijing Branch.
Comments:
Ordinary employees are the main subscription force, covering a wide range of bottom-up. The employee stock ownership plan is intended to cover a total of 892 people, including 12 board supervisors and 880 other employees of the company and its subsidiaries. The maximum amount of funds to be raised is 90 million yuan, of which the senior staff of the board of directors of the company intend to subscribe for 3.8 million yuan, accounting for 4.2% of the plan, while other employees plan to subscribe for a total of 86.2 million yuan, accounting for 95.8% of the plan. This shareholding plan takes ordinary employees as the main subscription force, and the company will form a community of interests from the bottom up to protect long-term performance growth.
Production capacity continues to be released and its leading position is consolidated. In the first half of 2018, the company successfully put into production 10, 000 tons of biochemical enemy grass fast industrial chain, 10, 000 tons of biochemical VB3 industrial chain and 25000 tons of biochemical pyridine alkali industrial chain. We believe that after the release of the above production capacity, the integrated layout of the company's industrial chain will be further improved. Under the current environment of continuous clearance of the supply side, the company is expected to further increase its market share by virtue of its leading position and cost advantage. profitability can continue to improve.
Steady progress has been made in the construction of the new base to reserve the momentum of long-term growth. The planning and construction of Anhui Dongzhi production base, the sixth largest production base of the company, made steady progress in the first half of 2018. In the near future, the base mainly plans to produce a series of products such as pyrethroids and fungicides, and will devote itself to building an industrial park integrating crop science and animal science in the medium and long term. After the completion of the industrial park, it is expected to enrich the company's core product line and provide reserves for the long-term growth of performance.
Domestic and overseas bilateral extension development, accelerate the horizontal layout of the industry. The company completed the acquisition and integrated 82.2% stake in Shandong Science and Technology, tamping the domestic layout; at the same time, with the acquisition of Argentina's Ruralco company launched in the first half of the year, the company is expected to make substantial progress in the globalization strategy. Through the epitaxial growth in the domestic and overseas markets, the company will further enhance its market position in the industry integration while optimizing the layout of production and sales channels.
Risk factors: paraquat gum was banned; the development of new products downstream of the pyridine industry chain was blocked.
Maintain a "buy" rating. We maintain the company's annual homing net profit forecast of $998 million for 2018-19-20, corresponding to $1.72 billion for EPS, and maintain the target price of $30 and a "buy" rating based on 18 times PE for 18 years.