In A shares, half of Luba's shares are aimed at Glyphosate

 Recently, Shandong Luba updated the prospectus, the company plans to list on the main board of the Shanghai Stock market. Shandong Luba plans to raise 1.35 billion yuan for five projects with an annual output of 8,500 tons of Glufosinate ammonium and 5,500 tons of Butanoic acid plant.

According to the prospectus, on June 20, 1997, Zhou Baodong, one of the founders of Luba, signed an agreement with Jinan Yanpai, a subsidiary of Shandong Yanshan, agreeing that Jinan Sixin Chemical Plant would transfer pesticide production equipment and other related assets to Zhou for 500,000 yuan.

In October 1997, Zhou and Zhao got to know each other and decided to start a business together. They set up Shandong Lvba and engaged in pesticide production and operation.

 Luba  is mainly engaged in the research and development, production and sales of pesticide technicals, pesticide formulations and fine chemical intermediates. It is a domestic agricultural chemical enterprise featuring pyridine industry chain and insecticidal herbicides. Its product functions cover weeding, insecticidal and sterilization, and are widely used in the prevention and control of diseases and pests in agriculture, forestry, animal husbandry and other fields, as well as in the fields of animal feed and medicine

At present, the company has completed the layout of more products in the Pyridine industry chain, mainly including Pyridine, 3-Methyl-pyridine and other intermediates, Gluroxypyr, Diquat, Paraquat, Chlorpyrifos sand other technicals and formulations.

From 2019 to 2021 and in the first half of 2022, the Pyridine industry chain of LUba achieved sales revenue of 1.146 billion yuan, 1.776 billion yuan, 2.429 billion yuan and 21.194 billion yuan respectively, accounting for 68.87%, 76.7%, 83.87% and 85.88% of the main business revenue.

 In terms of products, in the past three years, the proportion of revenue of pesticide technical products in Luba has increased from 38.99% in 2019 to 68.3% in the first half of 2022. The major component of technical revenue is herbicides, including Gluroxypyr, Diquat, Paraquat. In the reporting period, the proportion of herbicides in the income of technicals was 70.43%, 75.6%, 79.36% and 86.28%, respectively.

  Among them, Paraquat, due to its low price and good use effect, once ranked the second in China's production and use. It is the "king of pesticides" with annual sales of more than 100,000 tons and annual use area of more than 500 million mu. However, Paraquat is more toxic to humans and has no specific antidote. It is also known as the "water of death".

On April 24, 2012, according to the joint announcement No. 1745 of the related departments, the registration and production license of Paraquat AS were revoked and the production was stopped as of July 1, 2014. The registration for the export use of water agent by the TK manufacturers was retained and the production was allowed exclusively for export. The sale and use of Paraquat AS in China has been stopped since July 1, 2016. In the international market, the European Union, Brazil, Thailand and 

Among the herbicide products, Paraquat has contributed about 300 million yuan to the annual revenue of Luba. All the products are exported to the United States, Australia, Africa and other non-prohibited areas. Luba also said that if China or other overseas countries or regions expand the scope of Paraquat and other products prohibited or increase the relevant production and use restrictions, it may bring adverse effects on the company's sales.

In addition to Paraquat, Chlorpyrifos technicals and formulations of the existing products of Luba are also restricted pesticides, and their use on vegetables has been prohibited since December 31, 2016.

As for the possible risks of Luba’s products, the regulatory also requires it to explain the toxicity level of the company's existing products and the products of the raised project, whether they are highly toxic pesticides, whether they are prohibited or restricted by the state, whether they are restricted or eliminated, etc.

In the case of Paraquat is banned in many countries, the IPO Luba aimed at Glufosinate ammonium. Compared with other traditional insecticidal herbicides such as Glyphosate and Paraquat, Glufosinate ammonium is a new herbicide product of natural products. It has the characteristics of wide insecticidal spectrum, low toxicity, good absorption, high activity and environmental friendliness. This raised project, Luba will be more than half of the funds for Glufosinate ammonium project.

Luba’s Glufosinate ammonium and fine Phosphine oxalate projects are still under construction. The construction period of Glufosinate-P project with annual output of 8,500 tons is 2 years, and the construction period of Butanoic acid device project with annual output of 5,500 tons" is 1 year.

In addition, it is worth noting that Luba and a number of companies in the industry are not completely competitors, but business cooperation.

It is understood that the main customers of intermediate products of Luba include pharmaceutical manufacturing enterprises and pesticide technical manufacturing enterprises; The downstream of technical products are mainly pharmaceutical manufacturing enterprises, Pharmaceutical products are mainly downstream pesticide dealers.

In terms of overseas sales, the main customers of Luba include Syngenta, Newham, UPL and other subsidiaries of Hunan Haili, which plan to expand 3000 tons of Carbosulfan