In the first half of 2023, the company achieved revenue of 1.425 billion yuan, an increase of 6.14% over the same period last year, and a net profit of 172 million yuan, down 3.94% from the same period last year. Domestic and foreign sales are 308 million yuan and 1.117 billion yuan respectively, gross profit margins are 5.40% and 31.06% respectively, and the company's overseas revenue and profits account for 78.41% and 95.43% respectively. The company's R & D investment is stable, the oxazolidone project is expected to be put into production in October, and the green new pesticide project is progressing smoothly. We are long-term optimistic about the core technical advantages and overseas channel advantages that the company has, maintaining the net profit forecast of 2023, 2024, 2025, 4.61, 591, 739 million, and maintaining the target price of 22 yuan in 2023, and the "buy" rating.

The company's domestic business is under pressure, and overseas profitability continues to grow. In the first half of 2023, the company achieved revenue of 1.425 billion yuan, an increase of 6.14% over the same period last year, and a net profit of 172 million yuan, down 3.94% from the same period last year. 23Q2 achieved revenue of 683 million yuan, + 5.77% year-on-year,-8.04% month-on-month, and net profit of 79 million yuan, + 12.35% year-on-year and-14.30% month-on-month. Under the influence of the overall market of agrochemical, the price of domestic products has declined, and the company's overseas orders have steadily superimposed settlement currency exchange rate. In the first half of 2023, domestic and foreign sales were 308 million yuan and 1.117 billion yuan respectively, with year-on-year sales of-15.98% and + 14.44% respectively, and gross profit margins of 5.40% and 31.06%, respectively.

Domestic pesticide prices have declined significantly, and the focus of business has shifted overseas. According to Longzhong information data, the market prices of isooctyl chlorofluoropyloxylate, thiamide and acarbazide fell in the first half of 2023, from-30.3%,-31.67% and-17.62% to 11.5, 8.2 and 173,000 yuan per ton, respectively, compared with the beginning of the year. According to the company announcement, relying on the strong relationship with overseas customers, the focus of 23H1 business has shifted to overseas with higher gross profit margin, realizing revenue of 984 million, 96 million and 229 million yuan from crude drugs, preparations, intermediates and other products, with gross profit margins of + 2.02pcts,-5.51pcts and + 0.83pct to 26.28%, 23.38% and 29.17% respectively compared with the same period last year. The company's overseas revenue and profit accounted for + 5.68pcts and 20.48pcts, respectively, reaching 78.41% and 95.43%, respectively.

Research and development funds will be invested steadily, and new green pesticides will be put into production soon. According to the company announcement, affected by the policy, domestic traditional high-toxic / inefficient pesticides will gradually be replaced by new green pesticides, and domestic agrochemical enterprises gradually pay more attention to R & D; the company invested 38 million yuan in 23H1 research and development, accounting for 2.69%, compared with the same period last year. According to the company announcement, the 15500 ton new pesticide raw drug project is progressing smoothly; according to the Pesticide Information Network, the 5 million ton / year oxazolone project has made substantial progress and is expected to be put into trial production in October. After the creative products with good activity and huge market potential in the current R & D pipeline are put into production, the company's profits are expected to achieve new growth.

Risk factors: lower than expected demand, risk of price fluctuations of raw materials and products, less than expected progress of projects under construction, risk of exchange rate fluctuations, risk of policy change.

Profit forecast, valuation and rating: considering the strong overseas customer relationship and the smooth progress of the project under construction, we are optimistic about the company's core technical advantages and overseas channel advantages for a long time, and maintain the company's 2023, 2024 and 2025 homing net profit forecast of 4.61 and 5.91 million, respectively, corresponding to the EPS forecast of 1.49, 1.90 and 2.38 yuan, respectively. Yangnong Chemical, Besme and Guangxin, which have similar main business, are selected as comparable companies. According to the Wind consistency forecast, the comparable company's PE in 2023 will be 15,21 and 9 times respectively, with an average PE of 15 times, maintaining the company's 2023 15xPE, maintaining the target price of 22 yuan, and maintaining the "buy" rating.