Investment Rating - The investment rating for Longda Meat Foodstuff is maintained at OVERWEIGHT [7]. Core Views - Longda Meat Foodstuff's revenue for 2024 was RMB 10,990 million, with an attributable net profit of RMB 21.62 million, showing a year-on-year profit recovery of 101.41% despite a revenue decline of 17.49% [1][4]. - The company has implemented cost reduction and operational efficiency initiatives, which have led to improved gross margins and a turnaround in profits [1][2]. - The focus on high-margin prepared food products and the disposal of underperforming assets contributed to the positive profit trajectory [2][4]. Financial Performance Summary - In 2024, the food business revenue decreased by 14% year-on-year to RMB 1.9 billion, but its gross margin improved to 11.2%, up 1.11 percentage points [2]. - Slaughtering revenue fell by 6.6% year-on-year to RMB 9.0 billion, with a significant reduction in slaughter volume and hog sales, yet losses narrowed due to price recovery [2]. - For 1Q25, revenue was RMB 2.55 billion, with a net profit of RMB 4 million, indicating a year-on-year decline of 86% but a positive trend quarter-on-quarter [1][3]. Earnings Forecasts and Valuation - The 2025 and 2026 attributable net profit forecasts have been reduced by 30% and 13% respectively, now projected at RMB 146 million and RMB 212 million [4]. - A target price of RMB 6.34 has been set, reflecting a price-to-earnings ratio of 47x for 2025, which is above the industry average [4][8].

Core Viewpoint - The beef market in China has experienced a significant rebound in 2025 after a drastic decline in 2024, with prices rising sharply due to various factors including tax policy changes, domestic supply constraints, and increased consumer demand [1][3][12]. Group 1: Price Trends - In 2024, domestic beef prices fell to unprecedented lows, with some prices dropping to the "20s" per kilogram, while imported frozen beef also saw significant price reductions [2][11]. - As of April 11, 2025, live cattle prices reached 26.22 yuan/kg, a year-on-year increase of 3.5%, and beef prices were at 61.39 yuan/kg, showing a year-on-year decrease of 5.9% but a month-on-month increase [4]. - The price of imported beef has also seen volatility, with daily price increases reaching as high as 1500 yuan/ton [8][9]. Group 2: Factors Driving Price Increases - The recent surge in beef prices is attributed to three main factors: changes in tariff policies, a reduction in domestic cattle numbers, and a resurgence in consumer demand [12][13]. - The Chinese government imposed a 125% tariff on all imports from the U.S., leading to a drastic reduction in U.S. beef exports to China, which fell from over 2000 tons per week to less than 54 tons [14][15]. - Domestic cattle inventory has decreased by 8% year-on-year, leading to a significant reduction in beef production capacity [20][22]. Group 3: Consumer Demand and Market Dynamics - The recovery of the restaurant industry, particularly in hotpot and barbecue sectors, has significantly boosted beef demand, with new consumption trends emerging [25][27]. - Despite an increase in per capita beef consumption in China, it remains low compared to countries like Argentina and the U.S., indicating potential for future growth [26]. - The rising prices have put pressure on low-cost dining models, forcing restaurants to adjust their offerings and pricing strategies to maintain profitability [29][30]. Group 4: Future Outlook - Short-term price trends are expected to be upward, but a sustained "explosion" in prices is unlikely due to market adjustments and potential policy changes that could allow for more imports [36][38]. - The beef market may face challenges as consumer behavior shifts in response to rising prices, potentially leading to reduced consumption frequency [39]. - Restaurants are advised to control procurement costs, restructure menu offerings, and enhance customer experience to navigate the current market challenges [40][41][42].

Economic Overview - Concerns about a slowing economy have intensified, with the Federal Reserve unlikely to implement rate cuts soon due to persistent inflation [1][8] - Consumer confidence has dropped significantly, with the Conference Board's consumer survey index falling to 98.3 in February, below the expected 102.3 [7] Inflation Data - The consumer price index (CPI) rose by 0.5% in January, following a 0.4% increase in December, marking the largest jump since August 2023 [5] - Year-over-year, CPI increased by 3% in January, up from 2.9% in December, the highest annual gain since April 2024 [6] Consumer Staples Investment - Investing in consumer staples stocks is recommended as they are considered defensive during economic uncertainty [2] - Suggested stocks include Carriage Services, Inc. (CSV), Lancaster Colony Corporation (LANC), Tyson Foods (TSN), and Molson Coors Beverage Company (TAP), all carrying a Zacks Rank of 1 (Strong Buy) or 2 (Buy) [2] Company Profiles - **Carriage Services, Inc. (CSV)**: Expected earnings growth rate of 7.2% for the current year, Zacks Rank 2, beta of 0.91, and a dividend yield of 1.12% [12][13] - **Lancaster Colony Corporation (LANC)**: Expected earnings growth rate of 6.1% for the current year, Zacks Rank 2, beta of 0.31, and a dividend yield of 1.99% [14][15] - **Tyson Foods (TSN)**: Expected earnings growth rate of 22.6% for the current year, Zacks Rank 2, beta of 0.72, and a dividend yield of 3.26% [16][17] - **Molson Coors Beverage Company (TAP)**: Expected earnings growth rate of 6.5% for the current year, Zacks Rank 1, beta of 0.81, and a dividend yield of 3.07% [18][19] Investment Strategy - The recommended investment strategy focuses on low-beta stocks with high dividend yields and favorable Zacks Ranks [3]