Incident: On September 26, the State Council issued the “Strategic Plan for Rural Revitalization (2018-2022)”, which sets out constraints and expectations for grain production, contribution rate to agricultural science and technology progress, labor productivity, and urban-rural income ratio, and plans to basically modernize agriculture and rural areas by 2035 and comprehensive rural revitalization by 2050.

Opinions:

Strong agriculture, beautiful countryside, and rich peasants are at the core of the most important rural revitalization document in history. The background behind the introduction of the plan is that agriculture and rural areas have become the weakest link in the modernization drive. Although the 15 Central Committee Documents of the New Century focus on rural revitalization, the actual results are limited. Combined with the gradual cancellation of the marketization of grain prices after collection and storage over 16 years, whether farmers' income can continue to grow is the shortest limit to China's economic growth. Based on 5 mu per household, farmers' gross income from planting land each year is only 3000-5,000 yuan. Furthermore, there is no time to delay the shift to ensuring food security and increasing production and improving quality; it is time for the document to be issued.

Agricultural services have greatly improved planting efficiency and farmers' incomes. '18 was a golden year. Improving China's agricultural competitiveness through services is the general trend. Take Jinfeng Commune, the first modern agricultural service platform in China, as an example. Through the full land trusteeship model, the front-end reduces volume and increases revenue by optimizing formulations, the mid-end mechanization greatly improves planting efficiency, and back-end order farming connects with downstream enterprises such as Chia Tai to raise sales prices. It is estimated that under this model, farmers do not need to cultivate their own land, and their income can increase by more than 20% at the same time. Since its establishment in July 17, Jinfeng Commune has established 99 county-level communes, with a service area of about 2 million mu. The number of communes is expected to reach 150 and 300 in 18-19.

Maintain a “buy” rating. The company has an excellent management level, ranking first in domestic compound fertilizer sales for eight consecutive years, and is the only agricultural enterprise selected for the National Brand Program. The goal of Jinfeng Commune is to establish 1,000 county-level communes to serve 50 million farmers. The profit margin is huge. At the same time, it is also significantly boosting the parent company's compound fertilizer sales, and is expected to become a super unicorn in the domestic agricultural service sector. Since the second quarter, the commune has mainly been providing practical services, slowing down the pace of expansion, affecting short-term stock prices; they are optimistic about the gradual recovery in the company's performance and the competitiveness of Jinfeng Commune in the agricultural service sector to maintain “buying”.

Risk warning: The risk that Jinfeng Commune's progress is lower than expected.