Core Viewpoint - The article discusses the improvement of tax credit repair mechanisms in China, highlighting the importance of allowing businesses to restore their tax credit ratings through corrective actions and compliance with tax regulations [2][4]. Group 1: Tax Credit Repair Mechanism - The tax credit repair management system in China has been increasingly refined, allowing businesses to restore their tax credit ratings through commitments and corrective actions [2]. - In 2024, tax authorities helped 13 million taxpayers achieve tax credit repair or upgrades through improved interaction services and timely reminders [2]. - The repair mechanism reflects a governance philosophy that balances punishment and education, encouraging businesses to operate legally and rebuild their credit image [2]. Group 2: Case Studies and Implementation - A "small giant" enterprise in Zhuhai experienced a downgrade in tax credit rating due to a reporting error, which was resolved through a repair application after paying the owed taxes and penalties [1]. - A livestock company in Longjing faced restrictions due to a D-level credit rating but successfully restored it to C-level through a rapid response mechanism from the local tax authority [3]. - Local tax departments are enhancing digital capabilities to assist businesses in reducing credit loss, with initiatives like AI-driven services and smart regulatory measures [4]. Group 3: Future Developments - Tax authorities plan to further improve the tax credit repair mechanism, allowing businesses that rectify their tax obligations within three days to receive full credit restoration [4]. - Businesses that fulfill legal obligations to resolve abnormal statuses will automatically have their credit ratings reassessed without needing to apply for repair [4].

Core Viewpoint - Recently, a new company named Harbin Weichang Seed Industry Co., Ltd. has been established, focusing on agricultural seed operations and related businesses [1] Group 1: Company Formation - Harbin Weichang Seed Industry Co., Ltd. has been registered with a capital of 5 million yuan [1] - The legal representative of the new company is Tan Shouyu [1] Group 2: Business Scope - The business scope of Harbin Weichang includes agricultural seed operations, breeding of livestock and poultry, poultry farming, fertilizer production, feed production, and fertilizer sales [1] Group 3: Ownership Structure - Harbin Weichang is wholly owned by Harbin Pengda Seed Industry Co., Ltd., which is jointly held by Harbin Pengda Animal Husbandry Co., Ltd. and Shuanghui Development [1]

Investment Rating - The report initiates coverage with a rating of "Buy" for the company [2][7]. Core Views - The company is expected to see a stabilization and potential recovery in milk prices in 2025, which could lead to improved performance [6][9]. - The company has a strong backing from major shareholders, including Mengniu Dairy, which holds a 56.36% stake, ensuring a stable demand for its raw milk business [6][18]. - The report highlights the cyclical nature of the company's profitability, heavily influenced by raw milk prices and feed costs [6][7]. Financial Data and Profit Forecast - Revenue projections for 2025-2027 are estimated at 13.33 billion, 13.69 billion, and 14.11 billion CNY, with year-on-year growth rates of 0.6%, 2.65%, and 3.06% respectively [5][7]. - The net profit for the same period is forecasted to be 252 million, 432 million, and 727 million CNY, indicating a turnaround from losses in 2024 [5][7]. - The earnings per share (EPS) is expected to improve from -0.179 CNY in 2024 to 0.032 CNY in 2025, and further to 0.092 CNY by 2027 [5][7]. Business Overview - The company primarily focuses on raw milk sales, with a significant portion of its revenue derived from long-term contracts with major clients like Mengniu and New Hope Dairy [6][26]. - The company has expanded its operations to 47 farms across 13 provinces, with a total of 491,200 dairy cows, of which 51.08% are mature cows [6][21]. - New business segments, including feed and breeding solutions, are being developed, contributing to revenue diversification [6][22]. Valuation and Market Comparison - The report employs a comparable company price-to-book (PB) valuation method, suggesting a target price of 1.26 HKD per share for the next year, representing a 12.4% upside from the current price [7][9]. - The average PB ratios for comparable companies are projected to be 0.95, 0.80, and 0.69 for 2025-2027 [7][9]. Key Assumptions - The report assumes a 2% and 0.5% year-on-year growth in raw milk sales volume for 2025 and 2026, respectively, with an average selling price (ASP) increase of -2% in 2025 and 1.5% in 2026 [8][9]. - The cost of raw milk is projected to be 2.51 CNY/kg in 2025, with feed costs contributing significantly to overall expenses [8][9].

Group 1 - The company maintains its profit forecast for 2025/2026, with current trading at 26.9/11.0 times P/E and 0.9/0.8 times P/B for 2025/2026, raising the target price by 10.0% to HKD 1.43, while maintaining an "outperform" rating [1] - In 2024, the company reported revenue of CNY 13.3 billion, with a 2H24 revenue of CNY 6.8 billion, reflecting a year-on-year increase of 0.2%. The cash EBITDA for 2024 is CNY 3 billion, representing a growth of approximately 20% [1] - The company’s milk yield continues to improve, with a slight year-on-year increase of 1.6% to 12.8 tons per cow in 2024, and the herd size is expected to reach 491,000 by the end of 2024 [1] Group 2 - The company benefits from a decrease in feed costs by 16.7% and an improvement in milk yield, leading to a slight expansion of gross margin by 2.8 percentage points in 2024 [2] - Despite the decline in raw milk prices, the company’s cash EBITDA increased by 20% due to improved gross margins [2] - The industry is experiencing a reduction in herd size, with 85-90% of the industry facing losses, and a continued decrease in herd size is expected into 2025 [3] Group 3 - The company is positioned well in the industry downturn, with a projected domestic raw milk supply gap of approximately high single digits to 10% in 2024, and potential stabilization of raw milk prices anticipated in 2025 [3] - The industry is currently at the bottom of the cycle, and it is considered a favorable time for left-side investments [3]