Yangnong Chemical (600486): M & A expands and introduces concerns about the integration of agrochemical industry chain to enhance the value of 佛山桑拿网 the company
Event: On June 7, 2019, Yangnong Chemical issued a major asset purchase announcement for Sinochem Crops and Shenyang Sinochem Pesticide Chemical Development Co., Ltd. (Agricultural Research Corporation for short).
1.3 billion cash acquired 100% equity of Sinochem Crops and 100% equity of Agricultural Research Corporation, and the counterparty was Sinochem International.
The single-subject total non-net profit performance commitment for the three years 2019-2021 is 2.
The price is fair, in line with the goal of deep reform of state-owned enterprises.
The cash purchase does not dilute the minority shareholders’ equity, and the purchase price corresponds to an annualized PE of 9.
2 times, corresponding to 1 PB.
If the transaction is completed, Sinochem International’s agrochemical-related assets will be concentrated in Yangnong Chemical, and Yangnong Chemical’s single and single drug manufacturing company will be transformed into a centralized research, production, and sales integrated industrial chain professional pesticide business management platform.Promote the increase of industry concentration, enhance the company’s scale advantage, and enhance its competitiveness.
Complementary industry chains, varieties, R & D resources, sales networks and customers are complementary.
The distribution and trade of major pesticide products such as Sinochem Crops Parent Company and its subsidiaries Sinochem Agrochemicals and Sinochem Crops Singapore will become a rich and extended pesticide sales channel for listed companies.
The main products of Sinochem Crops Shenyang Kechuang include mesotrione, imazapyr, and pyrrolidone. It has two production platforms, Shenyang Kechuang and Nantong Technology. The products, production platforms and customers are highly complementary to Yangnong Chemical.
The agricultural research company is mainly engaged in the research and development of military innovative original drugs. It has a comprehensive domestic new pesticide creation system, and has the National Engineering Center for Pesticides and the only national key laboratory for new pesticide creation and development in China, Flumorph, Tetrachloropyramid,Ethiazole, formaldehyde, nitric acid and other invasive products have excellent effects.
1 + 2> 3, the synergy effect is obvious, which helps the company’s long-term development.
The two companies include the entire industrial chain of R & D, production, preparation, and sales. After the transaction is completed, the research and development aspect will greatly enhance the company’s innovative original drug research and development capabilities.To expand the company’s domestic and overseas preparation distribution channels, the company’s Rudong preparation project sales are expected to be resolved. Combining the advantages of the company’s original drugs such as permethrin, a strong combination will effectively promote the company’s long-term development.
Profit forecast: As the acquisition still needs the approval of the regulatory agency and the shareholders’ meeting, we will not consider the impact of the acquisition on the company’s performance for the time being. We maintain our profit forecast for 19-21 and estimate that the net profit for 19-21 will be 13.
22 trillion, EPS is 4.
88 yuan with a target price of 70.
88 yuan, corresponding to 16 times PE in 2019, maintain “Buy” rating.
Risk reminders: production safety risks, the risk of falling prices of products such as pyrethrin, the risk of weakening downstream demand, the risk of raw material prices, the failure of the promotion of dicamba-resistant genetically modified crops to meet expectations, the risk of failure to approve acquisitions, and the risk of deterioration of the underlying performanceThe risk that the integration of the target is less than expected, the risk of Sino-US trade disputes, and the risk of exchange rate fluctuations.