1. Policy analysis
(1) The 13th Five Year Development Plan for Petrochemical Industry: the development plan was officially issued by the Ministry of Industry and Information Technology in October 2016. It points out that "promote the exit of backward and inefficient production capacity, create greater market space for advanced production capacity; use advanced technologies such as cleaner production to upgrade existing production plants, reduce consumption, reduce emissions, and improve comprehensive competitiveness and sustainable development capacity", "Strengthen the research and development, promotion and application of the cleaner production process and advanced and applicable 'three wastes' treatment technology of dyes and their intermediates", "develop and promote the advanced cleaner production process and advanced and applicable pollutant treatment technology of pesticides and their intermediates, improve the environmental protection level of pesticide production; accelerate the creation and industrialization of new pesticide varieties with independent intellectual property rights."
(2) Guiding Catalogue of Industrial Structure Adjustment (2019 Edition): According to the Guiding Catalogue of Industrial Structure Adjustment (2019 Edition), "New technologies for cleaner production and intrinsic safety of dyes, organic pigments and their intermediates (including continuous sulfonation, continuous nitration, continuous acylation, continuous extraction, continuous hydrogenation reduction, continuous diazo coupling and other continuous processes of oleum sulfuric acid, catalysis, sulfur trioxide sulfonation, adiabatic nitration, directional chlorination, combined efficiency enhancement, solvent reaction, hydrogen peroxide oxidation, recycling and other technologies, as well as applicable technologies to replace phosgene and other highly toxic raw materials, membrane filtration and slurry drying technologies) The development and application of "is included in the encouraged industries; "The development and production of efficient, safe and environment-friendly new pesticide varieties, new dosage forms, special intermediates and additives, the production of chiral and three-dimensional pesticides by directional synthesis, and the development and production of new biological pesticide products and technologies" were included in the encouraged industries.
2. Market analysis
(1) Overview of the development of pesticides and pesticide intermediates in China: Pesticides refer to the chemical synthetic substances used to prevent, eliminate or control diseases, insects, grasses and other pests endangering agriculture and forestry, and to purposely regulate the growth of plants and insects, or the mixtures and preparations of various bioactive ingredients derived from organisms and their genes. According to the nature and downstream application, pesticides can be divided into herbicides, insecticides, disinfectants, and others.
Since the 21st century, China's pesticide industry has developed rapidly and has become the largest pesticide producer and exporter in the world. In 2015, the output of chemical pesticides in China reached 3.74 million tons. Since 2015, the output of chemical pesticides has decreased due to the implementation of supply side reform and the strengthening of environmental protection policies. In 2018, the output of chemical pesticide technical drugs in China was 2.0828 million tons.
(2) Development trend of pesticide and pesticide intermediate industry in China
1) New environment-friendly pesticides will grow rapidly: with the transformation of the level and mode of economic development, the awareness of environmental protection and food safety of the whole society is constantly strengthened, which makes the requirements and intensity of environmental protection governance increasingly improved. China has actively responded to the global management measures for the prohibition and restriction of highly toxic and high-risk pesticides, and accelerated the elimination of highly toxic, highly toxic and highly residual pesticides. New environment-friendly pesticides with high efficiency, low toxicity and low residue have become the focus of industry research and development and the mainstream trend. Pesticide formulations are developing towards water based, dust-free, controlled release and other efficient and safe directions, and new formulations such as water dispersible granules, suspension agents, water emulsions, slow and controlled release agents are accelerating their research and development and promotion. The promotion of new pesticide products with high efficiency, safety, economy and environmental friendliness will effectively promote the optimization and adjustment of pesticide product structure in China, and reduce the impact on the environment while meeting agricultural production needs.
2) The R&D investment has increased, and the independent innovation system has been further improved: although China has become a large pesticide production country, the vast majority of pesticide varieties are still imitation varieties. Due to the small scale and weak strength of enterprises, they cannot support the independent innovation of pesticides with high risk, high investment and long cycle. The R&D investment of most enterprises accounts for less than 1% of sales revenue, and the R&D investment of foreign innovative pesticide companies accounts for more than 10% of sales on average. According to the 13th Five Year Plan for the Development of Pesticide Industry, during the 13th Five Year Plan period, the R&D investment in China's pesticide industry accounted for more than 3% of sales revenue, and by 2020, the number of pesticide varieties created will reach more than 70. With the increase of the concentration of pesticide industry in China, the R&D investment of pesticide enterprises in China will further increase, which will help enterprises improve their independent innovation ability and improve their independent innovation system, so that China's pesticide industry will shift to the direction of new drug creation and production of medium and high-end products, effectively increase the scientific and technological content of pesticide products and product added value, drive the technological progress of China's pesticide industry, and enhance the competitiveness of the industry.
3. Competitive enterprise analysis
(1) Zhejiang Longsheng: a leading enterprise in the domestic dye industry, in which the manufacturing business is dominated by special chemicals such as dyes, auxiliaries and intermediates, supplemented by basic chemicals such as soda ash and sulfuric acid. The intermediate products and the Issuer's dye intermediate products belong to the category of dye intermediate products, and the dye products belong to the downstream products of the Issuer's dye intermediate.
(2) Yabang Shares: The company is mainly engaged in the production of dyes and dye intermediates, as well as the pesticide business and other special chemicals business.
(3) Acetic Acid Co., Ltd.: The company is mainly engaged in the R&D, production and sales of high-end specialized fine chemicals with acetic acid derivatives and pyridine derivatives as the main body.
4. Risk analysis
(1) Innovation risk
Scientific and technological innovation plays a vital role in maintaining the competitive advantage of existing products, developing new products and competing for market share of new products. Since its establishment, the company has been pursuing scientific and technological innovation to establish its market competitive position by improving quality, reducing costs, green environmental protection and safe production. However, the company also has the risk that the failure of scientific and technological innovation will lead to the loss of competitiveness of products, thus losing market share and unable to seize the market of new products.
(2) Product technology progress and iteration risk
In recent years, the company's related industries have increased the development of key technologies for cleaner production, and the upgrading and transformation of industry technologies have become a common practice. Cleaner production, recycling, and continuous and automatic production technologies have been generally attached great importance by production enterprises. With the continuous development and iteration of technologies in the corresponding fields in the future, the company may have the risk of losing the competitiveness of its products due to failure to respond to technological innovation and progress in a timely manner, which may have adverse effects on future operations.
(3) Technology R&D risk
Technical advantages are the core competitiveness of the company. Since its establishment, the company has been committed to the R&D, production and sales of 6-nitrate, 5-nitrate, chloropyridine and other products. After years of technical research and development and accumulation, the company has a core technology system that integrates basic product research, production process development and production equipment transformation, and its technical level is at the forefront of the industry. With the further development of fine chemical industry and the continuous improvement of environmental protection requirements, higher requirements will inevitably be put forward for fine chemical products. Whether there is technical advantage is the key factor to maintain core competitiveness. If the Company cannot accurately grasp the development trend of technology, products and market in the future, and the technology research and development deviates from or is disconnected from the market demand, the Company's existing competitive advantage may be weakened, which will adversely affect the market share, economic benefits and development prospects of the Company's products.
The materials selected in this section are from the Feasibility Study Report on the Investment of Dye Intermediates, Pesticides and Pharmaceutical Intermediates Project issued by Shangpu Huatai