Core Viewpoint - The report from Industrial Securities initiates coverage on October Rice Field (09676) with a "Buy" rating, projecting revenue for 2025/2026/2027 to be 6.864 billion, 8.097 billion, and 9.546 billion respectively, and net profit attributable to shareholders to be 606 million, 758 million, and 972 million respectively. The firm is optimistic about the company's revenue and profit elasticity in the mid-to-high-end rice and corn business under the health food trend [1]. Group 1: Company Overview - October Rice Field is a leading staple food company in China, with major business segments including rice, corn, miscellaneous grains and beans, and other products. In the first half of 2025, the company's revenue grew by 16.9% year-on-year to 3.06 billion, and adjusted net profit increased by 97.7% to 290 million. In the third quarter of 2025, revenue is expected to grow by approximately 25.7%-31.5%, with operating profit increasing by about 71.5%-90.5% [1]. Group 2: Revenue Structure and Product Strategy - In 2023, the revenue structure heavily relied on rice, which accounted for 79% of total revenue. However, with increased investment in other product categories, the revenue share of rice decreased to 67% in the first half of 2025. The company has focused on enhancing the brand influence of mid-to-high-end rice products, leading to a continuous increase in sales of premium rice, with the revenue from rice business growing by 21% year-on-year and gross profit increasing by 106% [1]. - Corn is emerging as a new staple food choice for consumers due to its low-fat characteristics, with the corn segment growing to become the company's second growth curve. In 2023, corn product revenue accounted for only 3%, but this increased to 14% in the first half of 2025. Additionally, the miscellaneous grains and other products, as well as dried goods and other products, each accounted for about 9% of revenue in the first half of 2025 [1]. Group 3: Channel Strategy - The effectiveness of the omnichannel strategy is evident, with the contribution of modern supermarkets and direct customer channels continuing to rise, becoming significant sources of revenue. In 2023, e-commerce platforms, as the main channel, accounted for 58% of revenue, while the share of online self-operated stores increased. The combined revenue share from modern supermarkets and direct customer channels rose significantly from 26% in 2023 to 35% in the first half of 2025 [2].

Core Viewpoint - The report from Industrial Securities initiates coverage on October Rice Field (09676) with a "Buy" rating, projecting revenue and net profit growth for 2025, 2026, and 2027, driven by the health food trend and the company's focus on mid-to-high-end rice and corn businesses [1] Group 1: Company Overview - October Rice Field is a leading staple food company in China, with major business segments including rice, corn, grains, beans, and other products [1] - In the first half of 2025, the company reported a revenue increase of 16.9% year-on-year to 3.06 billion yuan, with adjusted net profit rising 97.7% to 290 million yuan [1] - In the third quarter of 2025, revenue is expected to grow approximately 25.7%-31.5%, with operating profit increasing by about 71.5%-90.5% [1] Group 2: Revenue Structure and Product Strategy - In 2023, rice products accounted for 79% of total revenue, but this share decreased to 67% in the first half of 2025 due to the company's investment in other product categories [2] - The company has focused on enhancing its mid-to-high-end rice product offerings, leading to a 21% year-on-year revenue growth in rice business and a significant 106% increase in gross profit in the first half of 2025 [2] - Corn has emerged as a new staple choice for consumers, with its revenue contribution rising from 3% in 2023 to 14% in the first half of 2025 [2] - Other product segments, including grains, beans, and dried goods, each contributed approximately 9% to revenue in the first half of 2025 [2] Group 3: Channel Strategy and Performance - The company has seen positive results from its multi-channel strategy, with online sales accounting for 58% of total revenue in 2023, and the share of online self-operated stores increasing [3] - Revenue from modern supermarkets and direct customer channels has risen significantly, from 26% in 2023 to 35% in the first half of 2025, aided by partnerships with chains like Sam's Club [3] - Revenue from the distribution network has remained stable [3]

Core Insights - October Rice Field Group Co., Ltd. reported a revenue of 3.064 billion yuan for the first half of 2025, representing a year-on-year growth of 16.9% [1] - The company's gross profit reached 667 million yuan, with a significant increase of 50.1% compared to the previous year [1] - Adjusted net profit for the period was 294 million yuan, marking a remarkable growth of 97.7% year-on-year [1] Product Performance - Revenue from rice products amounted to 2.067 billion yuan, a 21% increase from the same period last year, with gross profit of 436 million yuan, up 106.34% [1] - Sales of high-end rice increased due to a strategic reduction in low-margin rice sales [1] - Corn products generated revenue of 433 million yuan, with a gross profit of 157 million yuan, becoming the second core product category [1] - Other products, including grains, beans, and dried goods, achieved revenues of 274 million yuan and 290 million yuan, respectively, both showing growth compared to the previous year [1] Supply Chain and Distribution - The company has integrated resources across channels for real-time monitoring of the entire value chain, with over twenty automated production lines in operation as of June 30, 2025 [2] - A modern logistics system has been established with five self-operated distribution centers and over ten local warehouses to ensure timely contract fulfillment [2] - Online channel revenue increased by 3.4% to 1.837 billion yuan, with e-commerce platform revenue rising by 6.2% to 1.163 billion yuan [2] - Revenue from modern supermarkets, direct customers, and distribution networks grew by 26.0%, 75.1%, and 29.8%, respectively [2] Future Outlook - The company plans to closely monitor industry dynamics and adjust its business layout and product mix accordingly [2] - There is a focus on expanding new channels and businesses while continuing to develop high-quality star products [2] - The company aims to enhance its core capabilities in procurement, production, inspection, and warehousing by deepening its presence in premium production areas for rice, corn, grains, beans, and other products [2]