At present, the company mainly distributes four series of pesticide varieties. The company is a high-tech enterprise, a designated pesticide production enterprise, a vice president of China Pesticide Industry Association and an executive director of China Pesticide Development and Application Association. At present, the company's main products are fluralin, quinoline, nicosulfuron, chlorpyrifos and other four series of products. In terms of technological innovation, as a high-tech enterprise, the company adheres to the road of "revitalizing enterprises through science and technology" and has successively built R & D platforms such as Jiangsu Enterprise Technology Center, Jiangsu (Fengshan) Chiral Pesticide Engineering and Technology Center and Academician Workstation. Through technological innovation, the company has been authorized to invent 9 patents, trifluralin and quizalofop have been identified as national key new products, and 14 products have been identified as high-tech products in Jiangsu Province. The company has a production capacity of 11000 tons of chlorpyrifos, 1300 tons of quizalofop, 1200 tons of nicosulfuron, 6000 tons of fluralin and 20000 tons of preparations. The company's revenue mainly comes from herbicides, which accounted for 68% of the company's operating income in the first three quarters of 2018, and 59% of the company's main gross profit in the first half of 2018.
The pesticide industry is expected to continue to develop in the future. With the gradual advance of agricultural modernization and agricultural mechanization, the global pesticide industry has entered a period of rapid development from 1960s to 1990s. After entering the 21st century, the world pesticide sales are still showing a growing trend. According to Phillips McDougall statistics, the global crop pesticide market achieved sales of US $49.92 billion in 2016. According to the report "Global crop Protection Chemicals Market Trends and prospects 2021", the crop protection chemicals market is expected to grow at a compound annual growth rate of 5.15%, and the market capitalization is expected to reach US $70.57 billion by 2021.
Fund-raising programs help the company grow. The company intends to raise 508.6 million yuan. After deducting the issuance expenses, the net amount of funds raised is expected to be 449.186 million yuan. The funds raised by the company are invested in the technical transformation projects of the original drug production line with an annual output of 1500 tons of nitrosulfone, 800 tons of quizalofop and 500 tons of quinovoryl furfuryl ester, 700tons of cyanofluoxate and 300tons of alkynyl ester, 1000 tons of trichloropyloxyacetic acid and 1000 tons of trichloropyloxyethyl acetate and other technical transformation projects. The commissioning of the future project will contribute to the improvement of the company's profits.
Profit forecast and rating. We estimate that the company's operating income from 2018 to 2020 will be 1.55 billion yuan, 1.84 billion yuan and 2.25 billion yuan respectively, the net profit will be 150 million yuan, 180 million yuan and 250 million yuan respectively, and the EPS will be 1.89 yuan, 2.27 yuan and 3.17 yuan respectively. Coverage for the first time, giving a "overweight" rating.
Risk hints: raw material price fluctuation risk, production safety risk, industrial policy change risk, exchange rate and gross profit margin fluctuation risk, trade friction risk, fund-raising project put into production and production schedule or fall short of expectations.
