According to the Wisdom Financial APP, Zhongjin released a research report stating that recently, the State Council Information Office held a press conference to interpret the relevant situation of financial support for high-quality economic development, bullish on the leading companies in the agriculture sector entering the value restoration channel. In the agriculture sector, a group of companies with strong comprehensive competitiveness, outstanding management advantages, and solid balance sheets have emerged. For example, Haid is leveraging domestic fodder competitive advantages to expand overseas, Muyuan and Wenshui are prioritizing the restoration of their balance sheets during the upward trend in pork prices and expanding steadily. Long-term funds are expected to be allocated preferentially. In addition, under the background of policy support for mergers and acquisitions and accelerated industrialization of biological breeding, leading companies in traits in China are expected to fill the gaps in varieties through mergers and acquisitions with the support of transgenic technology. Seed industry leaders are also expected to rapidly enter niche ecological areas through mergers and acquisitions.

CICC's main points are as follows:

Building a "long money, long-term investment" policy system, high-quality agricultural blue-chip stocks are expected to see valuation restoration.

The meeting proposed to improve the institutional environment for "long money, long-term investment" and required major index component stock companies to establish market value management systems. Zhongjin believes that in the agricultural sector, a group of companies with strong comprehensive competitiveness, outstanding management advantages, and solid balance sheets have emerged. For example, Haid leverages domestic fodder competitive advantages to expand overseas, Muyuan and Wenshui are prioritizing the restoration of their balance sheets during the upward trend in pork prices and expanding steadily. As of September 24, the price-to-book ratios (MRQ) of Haid / Wenshui / Muyuan were positioned at 5.3% / 23.9% / 3.8% since their listing and are all constituents of the CSI 300 Index.

Real estate support policies have exceeded expectations in terms of scope and strength, potentially driving improvements in meat and pet consumption.

Zhongjin believes that on one hand, since the beginning of the year, due to the gradual recovery of meat consumption, prices of related meat protein have shown varying degrees of decline. According to iFinD, beef / mutton / South American white shrimp prices have decreased by -13% / -8% / -29% since the beginning of the year. On the other hand, the expected decline in existing home loan rates is likely to unleash consumer vitality, leading to the recovery of demand for related meat consumption as the real estate industry enters a phase of restoration, which may stimulate banquet demands, household consumer needs of industry chain personnel, and subsequently drive the recovery of related meat consumption demand. In addition, the growth momentum of resilient and emotionally valuable pet consumption is also expected to continue.

Set six measures to promote mergers and acquisitions, the leading companies in the seed industry and traits are expected to drive industry structure optimization.

The meeting proposed to encourage strengthening industrial integration, increasing regulatory inclusiveness, and enhancing the efficiency of restructuring market transactions. Zhongjin believes that with the background of policy support for mergers and acquisitions and the acceleration of industrialization in biological breeding, China's leading companies in traits are expected to fill the variety gaps through mergers and acquisitions under the blessing of transgenic technology. The leading companies in the seed industry are also expected to rapidly enter segmented ecological areas through mergers and acquisitions, driving optimization of the industry structure. Compared to overseas, in the United States, the leading seed companies like Monsanto rely on mergers and acquisitions to connect the "trait + seed + agrochemical" business model loop, leading the optimization of the seed industry structure. In 2021, the CR2 of the corn seed industry in the United States/China were 70%/10% respectively.

Create two structural monetary policy tools, proposing that listed companies use investor return methods including dividends and repurchases to enhance the investment value of agricultural companies with dividend attributes. Zhongjin believes that the agriculture sector also has related targets with relatively stable dividends and high dividend potential: in terms of high dividends, Heilongjiang Agriculture has a relatively high and stable dividend, with an average dividend payout ratio of 78% from 2014 to 2023, and an average dividend yield of 3.1%; in terms of high dividend potential, muyuan foods and Wens Foodstuff Group are expected to increase dividends due to converged capital spending and excess profit, with muyuan foods' depreciation amount higher than capital spending in the first half of 2024, and the average dividend payout ratio from 2015 to 2022 for Wens/muyuan food companies is 39%/26%, with an average dividend yield of 2.4%/1.2%; Wens and others have also announced repurchase notices.

Regarding the targets: For the breeding chain, guangdong haid group (002311.SZ), wens foodstuff group (300498.SZ), and muyuan foods (002714.SZ) are recommended; for the planting chain, yuan longping high-tech agriculture (000998.SZ) and Heilongjiang Agriculture (600598.SH) are recommended; for the consumer chain, Guai Bao Pet (301498.SZ) is recommended.

Risk factors: fluctuations in raw material prices, risk of animal diseases, severe weather, and food safety risks.