Lier Chemical - Downstream inventory reduction proceeds smoothly, sales growth drives year-over-year high performance

The company released its 2025 annual report. For the full year, it achieved total operating revenue of 9.008 billion yuan, a year-on-year increase of 23.21%; net profit attributable to shareholders of the parent company was 479 million yuan, up 122.33% year-on-year; and non-recurring net profit attributable to shareholders was 479 million yuan, up 138.83% year-on-year. Among them, fourth-quarter revenue was 2.299 billion yuan, up 8.29% year-on-year, with a quarter-on-quarter increase of 4.38%; net profit attributable to shareholders was 97 million yuan, up 16.83% year-on-year, with a quarter-on-quarter decrease of 11.97%. The company plans to announce an annual dividend, distributing cash dividends of 2 yuan for every 10 shares (including tax), corresponding to a dividend payout ratio of 66.87%. We are optimistic about the company’s competitiveness in chloropyridine herbicides, glufosinate ammonium, and refined glufosinate ammonium, and its scale effects and technological advantages will solidify the company’s future growth potential.

Downstream inventory reduction went smoothly, and sales growth drove an increase in revenue. In 2025, the company’s revenue grew 23.21% year-on-year to 9.008 billion yuan, of which fourth-quarter revenue was 2.299 billion yuan, up 8.29% year-on-year and up 4.38% quarter-on-quarter. In 2025, prices of major bulk agricultural pesticide products remained at relatively low levels; however, as inventories returned to normal levels, some product prices rebounded, and the sales volume and overall gross profit margin of the company’s main products increased year-on-year. By business segment, revenue from agricultural pesticide active ingredient business was 5.625 billion yuan, up 37.16% year-on-year, with gross margin up 1.26 percentage points year-on-year to 18.16%, average selling price at 65,000 yuan/ton, down 6.05% year-on-year, and sales volume at 86,600 tons, up 45.99%. Revenue from the agricultural pesticide formulations business increased 22.80% year-on-year to 1.842 billion yuan, with gross margin up 2.73 percentage points year-on-year to 19.53%, average selling price at 19,800 yuan/ton, down 7.73% year-on-year, and sales volume at 93,100 tons, up 33.09%. By region, in 2025, international and domestic sales revenue were 4.845 billion yuan and 4.163 billion yuan, respectively, up 40.98% and 7.45% year-on-year; the export revenue growth rate was especially strong. Regarding subsidiaries, Jiangsu Kuaida’s cost reduction and expense-control effects were clear; revenue and net profit both increased by 3.17% and 31.51% year-on-year to 968 million yuan and 138 million yuan, respectively. Guang’an Lier’s new projects reached operation and full production, and combined with cost reduction and efficiency improvements, revenue and net profit increased by 50.97% and 626.43% year-on-year to 2.654 billion yuan and 111 million yuan, respectively. Hubei Lituo expanded capacity and achieved a turnaround to profitability.

Gross margin improved, and net profit margin improved. The company’s full-year gross margin was 18.92%, up 2.85 percentage points year-on-year. During the period, the overall expense ratio decreased to some extent. In 2025, the company’s selling/administrative/R&D/financial expense ratios were 1.76%/4.30%/3.60%/0.94%, respectively, corresponding to year-on-year changes of -0.11/-0.66/-0.02/+0.52 percentage points. Overall, the company’s net profit margin increased by 2.36 percentage points year-on-year to 6.45%.

Leading enterprises in glufosinate ammonium and refined glufosinate ammonium; orderly progress in capacity release. The company has arranged production bases in 7 locations, including Mianyang, Guang’an, Nantong, Yueyang, Hebi, Jingzhou, and Jinshi, forming production operations for domestic’s largest producer of chloropyridine-based pesticide active ingredients and formulations. It is also a domestic large-scale producer of glufosinate ammonium and refined glufosinate ammonium active ingredients, and the refined glufosinate ammonium process technology is globally leading. In the future, as the penetration rate of genetically modified crops increases, the use of combination formulations grows, and glufosinate ammonium replaces other herbicides, demand for glufosinate ammonium and refined glufosinate ammonium is expected to continue increasing. In 2026, the company will continue to promote product iteration, base technology upgrades, and the construction of key projects, and its long-term competitiveness is expected to be further strengthened.

Valuation

The company maintains a leading position in the chloropyridine herbicide industry, and we are optimistic about the company’s scale and technological advantages.

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