In the first three quarters of 2023, the company's revenue and return net profit were 36.03 yuan and 257 million yuan respectively,-49.25% and-84.78% respectively compared with the same period last year. The sharp decline in performance was mainly due to the downward price of glyphosate. Recently, the Ministry of Agriculture has announced a number of glyphosate-resistant transgenic varieties. With the increase of GM market penetration, the demand for glyphosate will be more flexible in the future, and the company's performance can be increased. The company has made steady progress in the creation of drugs and other projects, and the future production of benzoxazole can inject power into growth. Taking into account the downward trend of pesticide prices and demand, we have lowered the company's profit forecast for 2023-2025 to RMB 3.32 billion 8.71 billion. Considering that the company's main product glyphosate has price and demand elasticity, and the performance is expected to be improved, the company's new pesticide project gives the company performance growth in the long run, giving the company 12xPE in 2024, corresponding to a target price of 24 yuan, maintaining a "buy" rating.

The price of glyphosate, the main product, is-48.16% compared with the same period last year, and the company's performance has dropped sharply. In the first three quarters of 2023, the company's revenue and return net profit were 36.03 yuan and 257 million yuan respectively,-49.25% and-84.78% respectively compared with the same period last year.

The company is one of the main manufacturers of glyphosate in China, with a production capacity of 70,000 tons / year. According to Baichuan Yingfu, the average price of glyphosate in the first three quarters of 2023 was 343,000 yuan / ton,-48.16% year on year. The sharp decline in glyphosate prices has significantly affected the company's performance since 2023. Overseas restocking demand picked up in the fourth quarter, and prices may stop falling and stabilize. The sales of herbicides, pesticides and chlor-alkali products in the first three quarters of the company were 16.85,4.09 and 339 million yuan respectively, which were-64.26%,-19.92% and-17.28% respectively compared with the same period last year.

The publication of 37 glyphosate-resistant transgenic varieties is expected to boost demand for glyphosate. According to the Ministry of Agriculture on October 17, the catalogue of genetically modified Maize and Soybean varieties approved at the fourth meeting of the Fifth National crop Variety approval Committee contains 37 genetically modified corn and 14 genetically modified soybean varieties. among them, 23 maize varieties and all soybean varieties are resistant to glyphosate herbicides. With the domestic GM penetration rate continuing to increase, glyphosate is expected to achieve a demand increase of 34600 tons according to the 90% penetration rate of GM corn in 2028 (according to Wind, the total planting area of corn is 640 million mu; according to aBIOTECH, the amount of glyphosate is 900g/ ha). Most of the GM crops announced this time can tolerate 4 times the medium dose of glyphosate, and the demand for glyphosate will be more flexible in the future.

Promote the Chuang Chuang Pharmaceutical Project and inject long-term growth. During the third quarter, the company announced an intelligent technical renovation project with an annual production capacity of 100000 tons, and a new innovative green herbicide raw drug and preparation project, including the construction of a new innovative drug benzoxazole (JS-T205) 500t device and preparation production equipment. Benzoxazole has a leading advantage over similar products in activity and safety, and can fill the gap in the control of glyphosate and glyphosate-resistant weeds. The company has obtained an exclusive patent license for this product until December 15, 2034. When the project is officially put into production, it will inject power into the long-term growth of the company.

Risk factors: product price decline risk; raw material price fluctuation risk; the company's new project construction is not as expected; demand improvement is not as expected; GM variety approval public announcement is not as expected; GM variety market penetration is not as expected.

Profit forecast, valuation and rating: considering the sharp decline in pesticide prices and market demand compared with the same period last year, and the company's performance is under pressure, we downgrade the company's 2023x2024max 2025 profit forecast to 3.32x871max 1.115 billion yuan (the original forecast is 870pm 10.21pm 1.221billion yuan), corresponding to the EPS forecast of 0.75pm 1.96max 2.51 yuan (the original forecast is 2.85max 3.34max 3.93 yuan). Considering that the company's main product glyphosate has the elasticity of price and demand, and the performance is expected to be improved, the company's new pesticide project gives the company performance growth in the long run. With reference to the valuation of shares in Yangnong Chemical, Besme and Zhongqi, according to the Wind consistency forecast, it will be 14,13,8 times PE in 2024, an average of 12 times PE, and give the company 12 times PE in 2024. Adjust the 2024 target price to 24 yuan (the original target price is 43 yuan) and maintain the "buy" rating.