Summary of Dabeinong (002385.SZ) Earnings Review Company Overview - **Company**: Dabeinong (002385.SZ) - **Industry**: Agriculture in China - **Market Cap**: Rmb17.5 billion / $2.5 billion - **Enterprise Value**: Rmb25.8 billion / $3.6 billion - **Current Price**: Rmb4.23 - **12-Month Price Target**: Rmb8.00 - **Upside Potential**: 89.1% [1][2][6] Key Financial Highlights - **1H25A Net Profit**: Rmb235 million, EPS of Rmb0.055/share, compared to a loss of Rmb0.036/share in 1H24A [1] - **Recurring Net Profit**: Rmb196 million, versus a loss of Rmb244 million in 1H24A [1] - **Revenue Growth**: 4% YoY to Rmb13,559 million in 1H25A [40] - **Gross Profit**: Increased by 12% YoY to Rmb1,915 million [40] - **No Final Dividend Declared**: Consistent with the previous year [1] Earnings Estimates Revisions - **2025E Recurring Earnings**: Revised down by 25% due to lower hog pricing assumptions [2] - **2026E Recurring Earnings**: Revised down by 4% [2] - **2027E Recurring Earnings**: Revised down by 9% [2] Segment Performance - **Feed Operations**: Contributed 56% of total gross profit; gross profit per ton was Rmb417, down 10% YoY [23] - **Hog Farming**: Contributed 29% of total gross profit; total unit cost of market hog decreased by 16% YoY [26] - **Traditional Seeds**: Contributed 9% of total gross profit; driven by higher sales volume and unit gross profit [27] - **Biotech Seeds**: Expected to generate Rmb116 million in revenue in 2025E, with a potential increase to Rmb532 million in 2026E [21] Market Dynamics - **Hog Pricing Outlook**: Expected to improve to Rmb16.5/kg in 2026E, up from Rmb14.8/kg in 1H25A [20] - **Biotech Seed Penetration**: Anticipated to reach 7% in the 2024/25 planting season, lower than previous estimates [21] - **Traditional Seed Market**: Potential market gains in Southwestern regions due to product promotion [22] Cash Flow and Balance Sheet - **Operating Cash Flow**: Turned positive in 1H25A, compared to negative Rmb190 million a year ago [34] - **Free Cash Flow**: Negative Rmb363 million in 1H25A, an improvement from negative Rmb593 million in 1H24A [34] - **Net Debt**: Rmb8.14 billion as of end of 1H25A, with net gearing at 93% [35][36] Valuation and Risks - **Valuation Methodology**: Based on average near-term and long-term valuations, with a target price implying a P/E of 34x for 2025E [37] - **Key Risks**: Include uncertainty in hog prices, lower-than-expected feed consumption demand, and slower government plans for GM seed commercialization [38] Conclusion - **Investment Recommendation**: Maintain Buy rating on Dabeinong with a target price of Rmb8.00, reflecting strong potential upside based on market positioning and growth in biotech seeds [2][37]

Summary of Longping High-Tech (000998.SZ) Earnings Call Company Overview - **Company**: Longping High-Tech (000998.SZ) - **Industry**: Agriculture, specifically seed production - **Market Cap**: Rmb13.3 billion / $1.9 billion - **Enterprise Value**: Rmb24.4 billion / $3.4 billion - **12-Month Price Target**: Rmb12.00, indicating an upside of 18.9% from the current price of Rmb10.09 Key Financial Highlights - **1H25A Results**: - Net loss of Rmb164 million, compared to a profit of Rmb111 million in 1H24A - Recurring net loss of Rmb284 million, up from Rmb62 million a year ago - Revenue decreased by 16% YoY to Rmb2,166 million - Gross profit declined by 4% YoY to Rmb786 million - No interim dividend declared, consistent with the previous year [1][34] Earnings Estimates Revisions - **2025E**: Recurring earnings estimates revised down by 20% - **2026E**: Revised down by 5% - **2027E**: Revised down by 2% - Expected recurring net profit to decline by 30% in 2025E, but improve by 80% in 2026E, driven by rice seeds and Brazil corn operations [2][38] Segment Performance - **Domestic Corn Seeds**: - Gross profit down 40% to Rmb6.4/kg due to lower average selling price (ASP) and higher unit costs - Sales volume significantly decreased by 69% YoY [25][35] - **Hybrid Rice Seeds**: - Stable gross profit, maintaining a 20% market share in the domestic market - Expected to benefit from high disease resistance and premium pricing [22][26] - **Brazil Operations**: - Gross profit improved nearly 4.9x YoY, driven by lower high-cost inventory and stable pricing - Sales volume improved for the 24/25 Safrinha season [28][35] - **Biotech Seeds**: - Expected to reach 10% penetration in the domestic market by 2025E, potentially boosting total profit by 4% in 2025E and 13% in 2026E [24][29] Cash Flow and Balance Sheet - **Operating Cash Flow**: Negative Rmb938 million, consistent with seasonal patterns - **Free Cash Flow**: Negative Rmb1,169 million for 1H25A - **Net Debt**: Rmb8.38 billion with a net gearing ratio of 86%, down from 101% at the end of 2024A [30][34] Valuation and Risks - **Valuation Methodology**: - Near-term valuation based on a P/E of 30x for 2026E - Long-term valuation includes a P/E of 20x for traditional seeds by 2030E - Target price of Rmb12.0 implies a P/E of 30x for 2026E and 22x for 2027E [31][41] - **Key Risks**: - Slower-than-expected government approval for GM seed commercialization - Potential downturn in hybrid rice pricing cycle - Uncertainty in the recovery of the Brazil business [32][40] Conclusion - Longping High-Tech remains a dominant player in China's seed industry, with significant potential in biotech seeds. Despite current challenges, the company is expected to recover in the coming years, supported by improvements in rice seeds and Brazil operations. The investment thesis remains positive with a "Buy" rating based on future growth prospects and market positioning [38][41]

6 May 2025 | 3:57PM HKT China Agriculture Sector (quarterly) China Ag theme in play: tariff and soybean Tariff and soybean: The higher tariff China imposed on US goods import would add inflationary pressure on major grains. We estimate US Ag imports account for 21% of total China import of soybean, 15% in corn, 6-11% in major proteins such as poultry, pork and beef. However, the level of inflation is likely to be much milder than the incremental 135% tariff in our view, due to a strong harvest year in Brazi ...