Incidents:

The company released its 2024 mid-year report: In the first half of 2024, revenue was 3.4 billion yuan, net profit to mother was 0.55 billion yuan, and net profit to mother was 0.55 billion yuan, +63.5% year over year; of these, revenue for the second quarter was 1.57 billion yuan, +31.0% year on year, and net profit to mother 0.1 billion yuan, or -18.0% year on year.

reviews

Blueberry entered the pace of production expansion, and profits increased dramatically. The company successfully concluded the 2024 blueberry production season and achieved production and sales of about 0.026 million tons in the first half of the year, driving the revenue of the specialty fresh food business to 1.53 billion, +268.9% over the same period last year. Thanks to the increase in the proportion of patented seedlings and the promotion of the company's early promotion technology, the harvest time for the 24-year production season was significantly earlier, and it was possible to enjoy the high price of premature delivery. In the fourth quarter of 2023, the company harvested more than 1,400 tons of blueberries and the average sales price exceeded 0.1 million/ton. Fresh consumer products, mainly blueberries, contributed 0.62 billion in revenue in that year, an increase of 271.1% over the previous year. The company's blueberry production pace continued to accelerate in 2024, with exports of about 0.01/0.014 million tons in the first and second quarters, respectively. The share of blueberries increased significantly before April.

Pesticide formulations survive the winter and wait for spring, and the “field area” continues to be optimized. Affected by cyclical fluctuations, the company's pesticide formulation business was under pressure in the short term. In 2024, H1 achieved revenue of 1.37 billion yuan, -7.9% over the same period last year. In addition, the company continues to promote merit selection and elimination of bad holding companies participating in the “Tiantian Circle”. As of 2024, the number of H1 holding dealers was reduced to 17, and revenue was reduced by 0.147 billion. Overall revenue was -22.70% compared to the same period, but the continuous optimization of dealers will also ease the pressure on future companies to accrue depreciation. At present, pesticide prices have fallen to historic lows, and industry demand is expected to recover as industry inventories are further removed.

The land resources at hand are abundant, and the production season continues to advance. The company currently has about 0.04 million acres of land, corresponding to a production area of more than 0.03 million acres next year, an increase of more than 50% over the previous year. At the same time, the company is also actively expanding land resources to the greatest extent, and the scale advantage is expected to continue to improve. Furthermore, in line with the increasing proportion of patented seedlings and early promotion technology, the company's new blueberry production season is expected to be brought forward again.

Profit forecasting and valuation: Although the downturn in pesticide and dragon fruit businesses in the first half of the year caused some marginal disturbances, the advantage of land resources will support the continued expansion of the company's blueberry production capacity. Combined with the steady progress of early planning, the company's future performance growth can still be expected. We adjusted the company's net profit forecast for 2024-2026 to 0.684/1.045/1.244 billion yuan, corresponding to EPS of 0.68/1.03/1.23 yuan, respectively, and corresponding to the current PE valuation of 10.36/6.78/5.70 times, respectively. Maintain a buy rating.

Risk warning: Blueberry price fluctuations, extreme natural disasters, performance forecasts and valuations falling short of expectations