DBN Group(SZ:002385)2025-09-01 03:21Summary 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]