Limin to expand 6 products production capacity

On Nov 18, Limin released the information on investor relations research activity. Zhang, Vice Chairman, and Tao, representative of securities affairs attended the activity and answered the questions concerned by investors. The details are as follows:

Q: Many domestic enterprises have their layouts of Glufosinate ammonium, How does Limin judge the price trend of Glufosinate ammonium and Glufosinate-p in the future? Does your company's Glufosinate ammonium have advantages in terms of process and cost?

A: Glufosinate ammonium has been prominent in this year's market performance. Now the market demand is still on the rise. The food and energy crisis will drive the increase in the planting area of soybean, corn and other genetically modified crops in the Americas. The expansion of genetically modified crops will lead to an increase in the use of Glufosinate ammonium. At present, the production capacity of Glyphosate has been limited and the number of Glyphosate-resistant weeds has increased, so some of the market will be replaced by Glufosinate ammonium. And Paraquat remains in the international market, which will be replaced by Glyphosate and Glufosinate ammonium in the future. After experiencing a high price, the price of Glufosinate ammonium fell back, especially in the fourth quarter of last year, when it reached a high price of about ¥380,000. At present, the price is about ¥200,000, which we think is relatively reasonable. With the start of overseas orders in the fourth quarter and the arrival of domestic stocking season, we believe that Glufosinate ammonium will maintain a relatively stable price with small fluctuations. In late October, the company entered the trial phase of the project with an output of 5,000 T/A Glufosinate ammonium. Compared with the traditional processes of other companies, we adopted the advanced process of gas phase continuous method. After the production of 5000 tons of Glufosinate ammonium, we will choose Glufosinate-p, because it has smaller input and better efficacy. The project lab test of bioenzyme Glufosinate-p has been successfully completed, and preparation for the pilot test Glufosinate-p is under way.

Q: Could you please tell us the current production status of the project of 12,000 T/A Fosetyl-aluminium? When will the sales scale be established? And How much of a cost improvement will process improvements bring?

A: The test of this project was carried out at the end of April. Now the trial production has been completed, and all the technological processes, technologies and equipment have been verified. Due to the new production process, the main customer needs to carry out product verification, which is expected to be completed by the end of the fourth quarter of this year. The intermittent to continuous change will increase the yield of the reaction and reduce the loss, which will have a positive impact on the cost reduction. In addition, we have also reformed and upgraded the by-product recycling and environmental protection facilities, laying a foundation for stable production next year.

Q: What is the status of Mancozeb at present? What about raw material prices?

A: Mancozeb is the most widely used fungicide, the competitive pattern has been basically formed, the main impact is the price fluctuations of raw materials and overseas market price fluctuations. Since the beginning of last year, especially after the double control of energy consumption, the price of the main raw material, Ethylenediamine, has increased significantly. After September, the price of Ethylenediamine has fallen, because of the price of oil, the upstream raw material, and the decrease of downstream demand. The decline of the domestic Ethylenediamine’s price can improve the gross profit of our products. Currently, the price of Mancozeb is in an upward trend, and the gross profit of our products is gradually rising.

Q: What are the considerations behind the expansion of Limin's 6 products?

A: In late October, the company disclosed the technical modification announcement of Limin's 6 products. After the completion of the project, the production capacity will be 1,100 T/A Difenoconazole, 5,000 T/A Etidronate Disodium AS, 2000 T/A Amobam AS, 500 T/A Tembotrione technical, 1,000T/A Mesotrione technical, 3,000 T/A Zineb technical and a series of by-products. These are expansions of existing production capacity. Difenoconazole and Mesotrione are not very large tonnage products for the company, but they play an important role in our overall plant protection solution. Difenoconazole is a very good fungicide with strong compound property, which has a good control effect on vegetables, melons and fruits. Mesotrione is a selective herbicide in corn fields with excellent control effect, which can promote the growth of crops. It can be mixed with other herbicides, so we were optimistic about this product very early. Therefore, this project is to improve the company's product and capacity layout, improve the overall profitability of the product. If reasonable capacity is achieved, there will be scale effects. We want to reduce costs and improve profitability through technical innovation, production expansion and new processes.

Q: Is the production of Spinosad in Xinweiyuan expected to be released this year?

A: Spinosad is a relatively new product, can be applied in the pharmaceutical, veterinary and agricultural and the international and domestic demand is great. The product has great potential for future development. It can be used for more than 250 crops in more than 100 countries and regions. Actually, Veyong started this project in ten years ago. Through independent research and development, technology introduction and digestion and absorption, the current strains have reached the expected goal of industrialization. We plan to start selling by the end of the year.

Q: What is the current competitive landscape of Chlorothalonil?

A: In the whole year of last year and this year, the price of Chlorothalonil has dropped sharply, from more than ¥40,000 to about ¥21,000, but orders and production are normal. At present, the competition pattern of Chlorothalonil is basically stable, with no new or reduced capacity. Chlorothalonil is the second largest protective fungicide. Xinhe, the company's equity partner, has the first international and domestic production capacity, and has the core technology, cost and quality advantages of ammoxidation. Although the price of Chlorothalonil is relatively low, it is still necessary to stabilize the capacity and the competitive landscape. With the decline of raw material prices and rising demand in the future, we believe that the profitability of Chlorothalonil will gradually improve.

Q: What’s your expectation of the company in 2023 and the future product development of Limin?

A: The company will increase the capacity utilization rate of Glufosinate ammonium, fermented products, Fosetyl-aluminium and other projects as soon as possible, and seize the favorable opportunity of the price increase of leading products, the price decrease of main raw materials and the increase of gross profit of products, so as to ensure the improvement of our overall profitability. In terms of technology’s R&D, we will implement new energy projects, Glufosinate-p and other new products in the fourth quarter to cultivate growth points for the future.

At present, the company's bio-intelligent manufacturing and green chemistry R&D system platforms have been successfully built. In the future, we will stick to the main line of biosynthesis based on biological fermentation. The first main line is Abamectin, Spinosad and Antibiotic series products, we will continue to grow bigger and stronger. The second main line is the chemical synthesis of pesticide and veterinary drugs: including phosphate-grade products mainly with Glufosinate-ammonium, Afosetyl-aluminium and Fosthiazate; Sulfur-grade products mainly composed of Zineb, Propineb and Lime sulfure; And we will build fluorine chemical products based on lithium battery materials.