Key takeaway

The company ranks first in market share in China's agricultural trade sector, having invested in 35 physical logistics parks across more than 20 major cities nationwide, continuously consolidating the advantages of its "nationwide single-network" layout. In 1H26, the company's core wholesale market operations remained stable, with the GPM of its agricultural wholesale market operations increasing YoY. At the same time, the company is steadily advancing the construction of key projects such as Chengdu Xinjin, Shanghai Huinan, and Guangzhou Nansha, while continuously improving operational quality through regional market business mix adjustments, operational model innovation, and upstream-downstream supply chain collaboration.

Event

In 1H26, the company achieved operating revenue of RMB2.699bn, a YoY decrease of 22.70%, of which 2Q revenue reached RMB1.416bn, down ~27.4% YoY.

In 1H26, the company recorded net profit attributable to the parent of RMB254mn, a YoY increase of 33.09%; core net profit (excluding non-recurring items) was RMB167mn, up 7.34% YoY. In 2Q26, net profit attributable to shareholders reached ~RMB119mn, up about 2% YoY; core net profit stood at ~RMB90mn, down slightly YoY.

Quick Take

Consolidating core business foundation while enhancing operational quality and efficiency

In 1H26, the company's revenue from agricultural wholesale market operations reached RMB1.500bn, down 4.45% YoY, while operating costs decreased by 8.54% YoY, driving GPM up by 2.50 pcts to 44.04%. The company is steadily advancing the construction of key projects such as Chengdu Xinjin, Shanghai Huinan, and Guangzhou Nansha, while optimizing on-site business mix and operational models based on local market conditions. Several markets delivered robust profitability, including Tianjin HiGreen, whose net profit attributable to parent grew 35.14% YoY; Guangxi HiGreen, up 33.39%; Shenzhen Buji Seafood Market, up 27.39%; and Jiujiang Pipa Lake Market, up 18.27%. The growth at Guangxi HiGreen was mainly driven by intensified merchant recruitment in the fruit and vegetable zones and increased operating income, while Tianjin HiGreen's growth was primarily attributable to higher occupancy rates following earlier leasing promotions and cultivation efforts.

Optimizing business structure and improving resource allocation.

In 1H26, revenue from market support services reached RMB1.238bn, down 36.14% YoY. This decline was mainly attributable to rising comprehensive import costs (such as ocean freight), which prompted Shenzhen Agriculture Power, Shenzhen HiGreen Import & Export Co., and others to scale back their frozen food businesses, while Zhenxing Rural Industry Company and Guangxi HiGreen also reduced certain product categories to improve operational quality and efficiency. The company continued to refine its regional footprint by acquiring a 49% equity stake in Nanchang Western Logistics Company, and through Jiangxi HiGreen, it undertook the entrusted operation of Nanchang Hongwang Smart Agricultural Wholesale Market. Additionally, the Zhuxi HiGreen Agricultural Products Logistics Trading Center has secured project land, further expanding the nationwide distribution network.

Investment Recommendation: We believe that the operating model of agricultural wholesale markets offers a high degree of certainty and stability, and its cash flow advantages will gradually become more apparent. We update our earnings forecasts for 2026–2028 to RMB431mn, RMB450mn, and RMB492mn, implying P/E of 28x, 27x, and 24x, respectively. Maintain "Overweight" rating.

Risks

1. Intensifying industry competition. Companies like Sunhola, Xinfadi, Wanbang International, and China Agri-Products Exchange are expanding their industry chains and increasing their coverage in the farmers market, potentially intensifying market competition.

2. Slower-than-expected market support services development. Currently, some subsidiaries related to market support services are still in a loss-making state, and some companies are undergoing business adjustment and upgrading. If business development falls short of expectations, it may not be possible to turn losses into profits, affecting the company's earnings.

3. The risk of regional concentration of operations Currently, over 70% of the company's revenue comes from Guangdong and Guangxi. If there are significant adverse changes in the economic environment or residents' income in South China or intensifying competition in regional agricultural wholesale markets, it could negatively impact the company's operations.