Incident: The company released its 2023 annual report and its quarterly report for '24. It achieved revenue of 1,860 million yuan in 2023, +12.82% year-on-year, and achieved net profit of 302 million yuan, or +165.89% year-on-year. Among them, Q4 achieved revenue of $511 million, +25.45%/+29.51% YoY; realized net profit of 79 million yuan, or +258.08%/+46.31% YoY. 24Q1 achieved revenue of 366 million yuan, +9.25%/-28.40% YoY, and realized net profit of 68 million yuan, or +24.24%/+14.46% YoY.

The price trend of original drugs and fertilizer raw materials declined during the 23-year period. According to Baichuan data, the average market price of 23Q1-24Q1 polyazol (90% content Huadong) was 7.29/ 6.59/ 6.50/ 6.12/ 564,000 yuan/ton, -6.1%/-9.6%/-1.4%/-5.8%/-8.0%; on the fertilizer side, the price of 23Q1-24Q1 potassium dihydrogen phosphate was 1.11/ 0.90/ 0.82/ 0.86/ 0.800,000 yuan/ton, -6.7%/-18.3%/+4.0% /- 6.2% Looking at the medium- to long-term cycle, the pharmaceutical industry as a whole is in the de-capacity stage. We judge that the price of original drugs remains low and fluctuates. The company's main products are formulations, so the cost side directly benefits. In '23, the company's pesticides/fertilizer revenue was +10%/+23% year-on-year, and the corresponding gross margin was 43.91%/35.62%, +4.38/ +3.25 pcts year-on-year. On the production and marketing side, the company produced 38/ 28,000 tons of pesticides/fertilizers in '23, +40%/+26%, with sales volume of 3/80,000 tons, +25%/+31% over the same period. This is mainly due to the company's continuous channel construction and implementation of the full crop planting plan marketing. Looking at the short term, Q2 is the traditional peak season for pesticide demand, and the company's pesticide products are expected to rise in volume.

Expand the Daejeon market and open up market space for plant growth regulators. According to the company's annual report, according to rough estimates, the cost of plant growth regulators per mu of field is 10 yuan/year, and the investment cost of a single mu of 150 yuan/year in high-value-added fields such as non-crops and gardens, if 100% penetration is achieved, the market capacity of plant growth regulators in the above two major fields will reach 25 billion yuan and 38 billion yuan respectively. Currently, the level of plant growth regulators used in the field is low. As agricultural modernization progresses, the company has taken the lead in promoting application.

Investment advice: We forecast 24-26 revenue of 22.40/28.87/3.345 billion yuan, and the corresponding net profit to mother is 3.78/ 4.79/ 522 million yuan, corresponding to the current PE of 18.5/14.6/13.4 x, respectively, to maintain the “gain” rating.