23Q3, the company's main raw drug products market prices continue to decline, resulting in the company's performance under pressure. The current price is already in the historically low quantile. After October, the price trend of major crude drug products has stabilized and the demand for overseas replenishment has been added, and the company's performance is expected to improve. The company's 5 million tons / year oxazolone project is expected to be put into trial production this year. In the long run, the company's R & D and innovation capability is conducive to the continuous launch of innovative products and enhance the core competitiveness. We are long-term optimistic about the company's core technological advantages and overseas channel advantages. in view of the continued decline in pesticide prices in the first three quarters of 2023, we downgrade the company's 2023x2024x2025 homing net profit forecast to RMB 370pm 474pm 599 million, adjust the target price to RMB 15, and maintain the "buy" rating.

The company's 23Q3 performance was under pressure, with revenue and homing net profit compared to-18.68 per cent and 61.25 per cent. The company's 23Q3 achieved revenue of 555 million yuan, year-on-year-32.52%, month-on-month-18.68%; net profit of 31 million yuan,-74.39%, month-on-month-61.25%. The company's 23Q3 sales gross margin and net sales margin were 19.25% and 5.67% respectively, compared with the same period last year-5.15pcts and-8.98pcts, Qobi-4.81pcts and-6.01pcts, respectively.

Domestic pesticide prices have bottomed out, and short-term performance may improve. The market price of the company's main crude drug products continues to decline, resulting in pressure on the company's performance. According to Baichuan Yingfu and Choice, the market prices of isooctyl chlorofluoropyraxate, alkynyl ester, methoxyfenoxy tobacco, thiamethamide, and lentil are-45.43%,-12.16%,-46.04%,-35.02%,-30.95% to 22.50,9.60,44.2,8.31,17.2 million yuan / ton respectively compared with the same period last year. According to Baichuan Yingfu, the current price is already in the historically low quantile. After entering October, the price trend of the company's main crude drug products has stabilized, and the demand for overseas replenishment has picked up in the fourth quarter, and the company's performance is expected to improve.

Pay attention to the construction of new pesticide projects, long-term optimistic about the future growth of the company. According to the company announcement, the project under construction is 508 million yuan, with a month-on-month ratio of + 9.96%. According to the Pesticide Information Network, the 5 million ton / year oxazolone project in the 15500 ton new pesticide raw drug project has made substantial progress and is expected to be put into trial production this year. The company's 23Q3 R & D cost is 10.7599 million yuan, and the R & D expenditure rate is 1.94%, compared to 0.74pct. The company obtained three new patents in the third quarter, involving fungicides and herbicides. In the long run, the company's R & D and innovation capabilities are conducive to the continuous launch of innovative pharmaceutical products and enhance the core competitiveness.

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.

Earnings forecast, valuation and rating: we have long been optimistic about the company's core technical advantages and overseas channel advantages, but in view of the fact that pesticide prices continued to decline in the first three quarters of 2023, the company's performance declined significantly, so we lowered the company's 2023 pedigree 2024 pedigree 2025 net profit forecast to 3.70 ppm 474pm 599 million (the original forecast was 461 company591 million RMB). The corresponding EPS forecast is 0.80Universe 1.29 yuan, and the target price is adjusted to 15 yuan (the original target price is 22 yuan. Yangnong Chemical, Besme and Guangxin, which have similar main business, are selected as comparable companies. According to the Wind consistency forecast, the average 16xPE of comparable companies in 2023, taking into account the company's leading position in the pesticide market segment, will be given a certain premium, corresponding to 2023 18xPE). Maintain a "buy" rating.