This report is read as follows:

The results of the three quarterly reports exceeded expectations, and the eel price and the company's fish output exceeded expectations, which is expected to lead to a continuous rise in performance, optimistic about the layout of the company's long-term food industry chain, and the sustained and stable development of the feed business.

Main points of investment:

The performance exceeded expectations, maintained the "overweight" rating, and raised the target price to 21.30 yuan. In the first three quarters of 2022, the company achieved 5.312 billion in revenue, + 32.80% in the same period last year, and 241 million in net profit, + 187.26% in the same period last year. Based on the substantial profit growth in the first three quarters, the company's breeding business scale expanded rapidly, and the profitability of eel farming exceeded expectations, so it raised the EPS of 2022 yuan 2024 to 0.71 soybean 1.11 pound 1.35 yuan (the previous value is 0.54 pound 0.66 pound 0.77 yuan respectively), gave 30X PE in 2022, raised the target price to 21.30 yuan (the previous value is 17.25 yuan), and maintained the overweight rating.

Feed against the trend growth, the growth rate outperformed the industry. In the first three quarters, the company had 155400 tons of special water feed, + 21.25% year-on-year, and livestock feed sales of 901400 tons, + 16.82% over the same period last year. In the same period, data from the Feed Industry Association show that from January to August, national meat, poultry and pig feed decreased by 6.8% and 7.9% compared with the same period last year, while aquatic feed increased by 15.1%. The company's feed sales grew against the trend when the industry was poor, outpacing the industry.

The profit of eel culture is higher than expected and will continue to expand at a high speed in the future. In the first three quarters, the company's eel culture revenue was 494 million, commodity eel sales were 5819.35 tons, roast eel food sales were 1259.40 tons, contributing profits exceeded 150 million, gross profit margin was more than 40 percent, and eel culture profits exceeded expectations. At the company level, the company plans to lay out the whole industry chain of eel, and has built a feed-culture-food processing industry chain of eel. By the end of the third quarter, the company's fixed assets increased by 54.73% compared with the same period last year, and projects under construction increased by 78.31%. The breeding project is carried out step by step.

Risk tips: risk of large price fluctuation of eel, lower than expected risk of new products and new business promotion, risk of breeding epidemic, etc.