Jiangsu Yangnong Chemical: Position at the Trough for Upcycle Opportunities

研报英文原文证据摘录

Jiangsu Yangnong Chemical: Position at the Trough for Upcycle Opportunities

FoundationM

Executive Summary

Yangnong is a leader of generic crop protection products globally in terms of capacity. The

company derives 58% of 2025 revenue from overseas markets, with all major global

agrichem companies among its customers. As a result, its performance largely reflects the

global agrichem cycle, which depends on factors such as the outlook for global farmers'

economics, agrichem channel inventory, regulatory changes, and other industry dynamics.

In this report, we focus on key industry trends rather than company-specific details.

Yangnong's broad product portfolio and diverse customer base make it highly sensitive to

changes in the global agrichem cycle, which we view as the primary driver of agrichem

prices, volumes, and, ultimately, the company's earnings trajectory.

With that said, we acknowledge that Yangnong, similar to many leading China chemical

companies, benefits from cost advantages driven by vertical integration and enjoys

volume growth from new project ramp-ups. We address company-specific details in the

Financial Forecasts section of this report.

Despite near-term market concerns around farmers' affordability and agrichem feedstock

cost pressures, we see three reasons to accumulate the name at current levels: (1)

Valuation sits near a 10-year trough, with limited downside; (2) The Middle East conflict

may support an upcycle in crop prices, which historically led agrichem upcycles; and (3)

Agrichem channel inventory appears to be at a level that can support restocking demand.

We recommend positioning at the trough to capture upside potential from a cyclical

recovery, particularly as we expect demand drivers – such as restocking – to improve over