Core viewpoints
The first phase of the company's employee stock ownership plan to complete the stock purchase, covering 763 employees, the contribution amount of 65.6 million yuan. This shareholding plan covers a wide range and is fully bound to the interests of employees, which is expected to protect the long-term development of the company. We maintain the company's target price of 30 yuan and maintain the "buy" rating.
Employee stock ownership plans to complete stock purchases to protect long-term development. The company announced on February 26 that the company has completed the first phase of the stock purchase of the employee stock ownership plan. The total number of employees actually participating in the first phase of the employee stock ownership plan is 763, with a total contribution of 65.6 million yuan. A total of 4.55 million shares were purchased, accounting for 0.78% of the company's total share capital, with an average transaction price of 14.40 yuan per share and a transaction value of 65.55 million yuan. This shareholding plan takes ordinary employees as the main subscription force, covers a wide range, and forms a community of interests from the bottom up, which is expected to protect the long-term business development.
3000 tons of oxamidophosphonium has been put into production, creating a new growth point of performance. The glyphosate project of Nanjing Red Sun biochemical Construction, a wholly owned subsidiary of the company, was recently completed and successfully started at one time. The project has an annual production capacity of 3000 tons and has technical advantages such as low cost, high safety, energy saving and less discharge. In recent years, the glyphosate industry has expanded rapidly, and the industry operating rate has warmed up in the second half of 2018. The total production capacity of the main domestic production enterprises is 33000 tons, and the company's production capacity occupies 9%. As the project reaches production capacity in the future, the company's competitiveness and voice in the sterilized herbicide market will be further improved, creating new performance growth points for the company.
The proposed acquisition of Chongqing Zhongbang, the industrial chain to promote growth. The company plans to buy 100% equity of Chongqing Zhongbang for 1.186 billion yuan, and its main products are three pharmaceutical intermediates 2pyrrolidine and ZPT. Chongqing Zhongbang industrial chain is an important supplement to the company's existing product range, and has a synergistic effect with the company's original industrial chain. We are optimistic that the prosperity of the industry will rise under the tight supply and demand pattern, and Chongqing Zhongbang is expected to increase its market share under the background of production restrictions of leading enterprises. The acquisition promises that the net profit of Chongqing Zhongbang from 2018 to 2020 is not less than 6449 yuan, 8477 yuan and 112.14 million yuan respectively, and the statement is expected to drive the company's performance growth.
Risk factors: lower-than-expected capacity release; increased competition in the industry; declining global demand for pesticides.
Investment suggestion: maintain the forecast of the company's annual return net profit in 2018-19-20 as 998149C 1.356 billion yuan, corresponding to EPS 1.72Unix 1.98Unix 2.33. Maintain the target price of $30 and the "buy" rating at 18 times PE in 2018.
