Major Boost for Agricultural Reclamation Reform: Three Types of Beneficiary Stocks Expected to Rise
According to a Xinhua News Agency report, on October 13, Xi Jinping, General Secretary of the CPC Central Committee, President of the People's Republic of China, Chairman of the Central Military Commission, and head of the Central Leading Group for Comprehensively Deepening Reform, presided over the 17th meeting of the Central Leading Group for Comprehensively Deepening Reform, which reviewed and approved the "Opinions on Further Advancing the Reform and Development of Agricultural Reclamation
According to a Xinhua News Agency report, on October 13, Xi Jinping, General Secretary of the CPC Central Committee, President of the People's Republic of China, Chairman of the Central Military Commission, and head of the Central Leading Group for Comprehensively Deepening Reform, presided over the 17th meeting of the Central Leading Group for Comprehensively Deepening Reform, which reviewed and approved documents including the "Opinions on Further Advancing the Reform and Development of Agricultural Reclamation." The meeting pointed out that in advancing the reform and development of agricultural reclamation, it is necessary to adhere to the direction of socialist market economy reform, uphold the separation of government from enterprises and of social functions from enterprises, take safeguarding national food security and the effective supply of important agricultural products as the core, take the advancement of reclamation-area groupization and farm enterprise-ization reform as the main line, rely on innovation-driven development, accelerate the transformation of the economic development model, advance the integration of resources and assets and the optimization and upgrading of industries, build large bases, large enterprises, and large industries of modern agriculture, comprehensively enhance internal driving forces, development vitality, and overall strength, and give play to the backbone and leading role in modern agricultural development.
In this regard, analysts pointed out that the current policy intensity for agricultural reclamation reform is unprecedented, and as the agricultural reclamation system with the highest degree of marketization and the best large-scale production, its reform is expected to be advanced first. After the agricultural reclamation reform, social functions will be stripped off, and the profitability of agricultural reclamation companies will be significantly enhanced; listed companies under agricultural reclamation groups are expected to receive asset injections from the groups; a large amount of land resources of agricultural reclamation listed companies will undergo value reassessment, and enterprises related to agricultural reclamation reform will directly benefit and are worth watching.
According to statistics by a Securities Daily reporter, at present in the A-share market, there are a total of 16 stocks involving the agricultural reclamation reform concept, namely Kingenta, Sierte, Batian Shares, Yasheng Group, Huifeng Shares, Hainan Rubber, Keming Noodle Industry, Yituo Shares, Xinyan Shares, Denghai Seed Industry, Beidahuang, Yongan Forestry, Jilin Forest Industry, Wanxiang Denong, Huilong Shares, and Dabeinong.
From the secondary market perspective, since October, the performance of agricultural reclamation reform concept stocks has been notable. Apart from Jilin Forest Industry, which is suspended from trading, the market performance of the 15 tradable concept stocks during the period all outperformed the broader market (the Shanghai Composite Index rose 6.87% during the same period), among which Huifeng Shares, Batian Shares, Sierte, and Dabeinong all saw cumulative gains of more than 20% during the period, reaching 29.47%, 24.89%, 20.3%, and 20.02% respectively, while Beidahuang, Keming Noodle Industry, Wanxiang Denong, Huilong Shares, Kingenta, Denghai Seed Industry, Yituo Shares, and Yongan Forestry all saw cumulative gains of more than 10% during the period.
It is worth mentioning that the 2015 No. 1 Central Document for the first time highlighted in one section the acceleration of agricultural reclamation reform, mentioning “accelerating the study and introduction of policies and measures to advance the reform and development of agricultural reclamation, deepening the reform of farm enterprise-ization, reclamation-area groupization, and equity diversification, and innovating the industry guidance and management system, the enterprise market-oriented operation system, and the farm operation and management system.” Combined with the fact that in 2014 multiple central ministries and commissions conducted research on the agricultural reclamation system, and against various backgrounds such as the acceleration of land circulation reform, the state's intention to cultivate large agricultural enterprises, and state-owned enterprise reform, Essence Securities believes that comprehensive transformation of the agricultural reclamation system is imminent, and the agricultural reclamation system will usher in the first year of comprehensively deepening reform in 2015.
Relevant data show that at present, there are 34 agricultural reclamation areas nationwide, with a total land area of about 540 million mu, accounting for 3.7% of the national land area. Within the agricultural reclamation system there are hundreds of thousands of enterprises and institutions, including 1,786 state-owned farms and, apart from farms, 3,350 state-owned enterprises, and the assets of state-owned enterprises within the agricultural reclamation system exceed one trillion yuan.
From an investment perspective, Zhongtai Securities stated that three types of companies are expected to benefit from the advancement of agricultural reclamation reform: 1. Listed companies in the agricultural reclamation system will directly benefit, including Beidahuang, Hainan Rubber, and Yasheng Group; 2. Kingenta, Noposion, Longping High-Tech, and Nongfa Seed Industry, which have strong integration capabilities in the agricultural inputs field; 3. Agricultural machinery companies benefiting from large-scale planting, including Jifeng Agricultural Machinery, Xingguang Agricultural Machinery, and others.
In this regard, analysts pointed out that the current policy intensity for agricultural reclamation reform is unprecedented, and as the agricultural reclamation system with the highest degree of marketization and the best large-scale production, its reform is expected to be advanced first. After the agricultural reclamation reform, social functions will be stripped off, and the profitability of agricultural reclamation companies will be significantly enhanced; listed companies under agricultural reclamation groups are expected to receive asset injections from the groups; a large amount of land resources of agricultural reclamation listed companies will undergo value reassessment, and enterprises related to agricultural reclamation reform will directly benefit and are worth watching.
According to statistics by a Securities Daily reporter, at present in the A-share market, there are a total of 16 stocks involving the agricultural reclamation reform concept, namely Kingenta, Sierte, Batian Shares, Yasheng Group, Huifeng Shares, Hainan Rubber, Keming Noodle Industry, Yituo Shares, Xinyan Shares, Denghai Seed Industry, Beidahuang, Yongan Forestry, Jilin Forest Industry, Wanxiang Denong, Huilong Shares, and Dabeinong.
From the secondary market perspective, since October, the performance of agricultural reclamation reform concept stocks has been notable. Apart from Jilin Forest Industry, which is suspended from trading, the market performance of the 15 tradable concept stocks during the period all outperformed the broader market (the Shanghai Composite Index rose 6.87% during the same period), among which Huifeng Shares, Batian Shares, Sierte, and Dabeinong all saw cumulative gains of more than 20% during the period, reaching 29.47%, 24.89%, 20.3%, and 20.02% respectively, while Beidahuang, Keming Noodle Industry, Wanxiang Denong, Huilong Shares, Kingenta, Denghai Seed Industry, Yituo Shares, and Yongan Forestry all saw cumulative gains of more than 10% during the period.
It is worth mentioning that the 2015 No. 1 Central Document for the first time highlighted in one section the acceleration of agricultural reclamation reform, mentioning “accelerating the study and introduction of policies and measures to advance the reform and development of agricultural reclamation, deepening the reform of farm enterprise-ization, reclamation-area groupization, and equity diversification, and innovating the industry guidance and management system, the enterprise market-oriented operation system, and the farm operation and management system.” Combined with the fact that in 2014 multiple central ministries and commissions conducted research on the agricultural reclamation system, and against various backgrounds such as the acceleration of land circulation reform, the state's intention to cultivate large agricultural enterprises, and state-owned enterprise reform, Essence Securities believes that comprehensive transformation of the agricultural reclamation system is imminent, and the agricultural reclamation system will usher in the first year of comprehensively deepening reform in 2015.
Relevant data show that at present, there are 34 agricultural reclamation areas nationwide, with a total land area of about 540 million mu, accounting for 3.7% of the national land area. Within the agricultural reclamation system there are hundreds of thousands of enterprises and institutions, including 1,786 state-owned farms and, apart from farms, 3,350 state-owned enterprises, and the assets of state-owned enterprises within the agricultural reclamation system exceed one trillion yuan.
From an investment perspective, Zhongtai Securities stated that three types of companies are expected to benefit from the advancement of agricultural reclamation reform: 1. Listed companies in the agricultural reclamation system will directly benefit, including Beidahuang, Hainan Rubber, and Yasheng Group; 2. Kingenta, Noposion, Longping High-Tech, and Nongfa Seed Industry, which have strong integration capabilities in the agricultural inputs field; 3. Agricultural machinery companies benefiting from large-scale planting, including Jifeng Agricultural Machinery, Xingguang Agricultural Machinery, and others.