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The company released its 2023 mid-year report: in the first half of 2023, revenue was 5.29 billion yuan, a year-on-year decrease of 14.02%; net profit of Gimu was 281 million yuan, a year-on-year decrease of 19.10%. Among them, quarterly revenue for the second quarter was 2.83 billion yuan, a year-on-year decrease of 20.89%, and net profit for the second quarter was 160 million yuan, a year-on-year decrease of 22.80%.
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The yield of summer grains reached a new high, and the planting structure was continuously optimized. This year, the company's summer grain production achieved another excellent performance. The total output of summer grains was 622,700 tons, an increase of 85,200 tons over the same period last year. Among them, wheat/barley/oilseed production reached 5463/659/10,500 tons, respectively, an increase of 12.27%/51.24%/40.64% over the previous year.
Through joint efforts to upgrade depressions and research on ultra-high yields, the average wheat yield per mu of the company's own base reached 1,234 kg, a record high. The company also ensured the completion of 120,000 mu of soybean and corn complex planting tasks and further optimization of the planting structure by optimizing the farming technology model and improving agricultural machinery support.
Continue to expand arable land resources to ensure the company's long-term growth. The company promotes land circulation in a timely and orderly manner in line with its own business development plans. As of summer broadcasting in 2023, the area of cultivated land under independent management was about 1,282,500 mu, of which 325,300 mu of land had been transferred, an increase of nearly 30,000 mu over the same period last year. Superior arable land resources are the company's core advantage. The company's operating land area continues to grow steadily, ensuring the sustainability of the company's long-term growth.
Food prices have now rebounded, and a recovery in consumption is in sight. With the easing of the geopolitical situation and the resumption of food transportation, global food prices have generally shown a downward trend this year. Furthermore, domestic consumption is recovering slowly, and social demand for grain and oil is not strong, which is hampering sales of the company's products. During the reporting period, the company's self-produced wheat and rice exports decreased by 22.3% and 35.5%, respectively. Cooking oil was also hampered by poor sales in the industry. Sales volume decreased by 32.9% year on year, and gross margin declined slightly. However, due to the occurrence of the El Niño phenomenon, it has triggered disasters such as high temperatures and floods in many parts of the world, including at home, and has reignited market concerns about the supply of food for the new season. Recently, food prices have clearly rebounded. As domestic consumption gradually stabilizes, the domestic grain and oil market is expected to rise sharply in volume and price, which is significantly beneficial to the company's overall profitability.
Profit forecast and valuation: Due to the decline in global food prices exceeding expectations and the adverse impact of weak domestic consumption on the company's grain and oil sales, the company's net profit for 2023-25 was lowered to 647/994/976 million yuan. The corresponding EPS was 0.47/0.66/0.71 yuan, respectively, and the corresponding PE valuation was 25.30/18.08/16.76 times, respectively. However, since profit fluctuations are mainly affected by the macro environment and will not affect the long-term value of the company, we have kept our target price unchanged at 13.28 yuan and maintained an increase in our rating.
Risk warning: Risk of fluctuating food prices, risk of natural disasters, performance forecasts and valuations falling short of expectations.