The eel culture produced fish steadily, and the profit was released rapidly. 22Q1 began the company's eel farming business to enter a stable fishing period, selling 5819 tons of eel in the first three quarters, and is expected to produce more than 8000 tons of fish for the whole year. The amount of fish produced by eel culture will still increase rapidly in the past 24 years. From the experience of eel price fluctuation, the price of eel is on the low side at present, and there is still room for price to go up in the future. The company is expected to achieve the volume and price rise of eel sales in 24 years and accelerate the release of profits. In 2021, the company decided to increase the ecological breeding base project of Anguilla. Starting from 23 years, the above eel culture projects are expected to be put into production one after another to promote the medium-and long-term development of eel culture business. In addition, the above aquaculture projects can also raise other high-end aquatic products, increasing the flexibility of management.

The feed business is expanding steadily, and the special water material is growing well. In terms of special water materials, the company adheres to the "ten fish" strategy and actively develops new special aquatic products to meet the needs of downstream aquaculture. The company through convertible bonds, self-financing and other ways to build a number of special water production lines, plus special water feed production capacity. In terms of livestock and poultry feed, the company holds 81% of the shares of Hualong Group, which is used as the core to continue to expand the livestock and poultry feed business. At present, the design capacity of Hualong Group (including Xinhuagang) is about 1.8 million tons / year, and the actual production capacity is about 1.5 million tons / year. In the future, the livestock and poultry feed business will still expand slightly, and the sales area will also move from around Fujian to the whole country.

Food processing business continued to grow, eel upstream and downstream industry chain coverage completed. At present, the company's food business is jointly built by the company's headquarters, Jiangxi Xilong and Tianma Furong. The main products are roast eel as the core, including baked eel, high-end braised eel, eel rice bento, ginger duck, roast mackerel and other dishes. In terms of production capacity, the company relies on the food industry base construction project (phase I) to actively expand food production capacity such as roasted eel. In terms of channels, the company relies on the advantages of the whole industrial chain of the group to develop domestic and foreign markets. From e-commerce, new retail, Shang Chao, central kitchen, catering and other mainstream channels, and the use of young, personalized strategy to promote.

Investment suggestion: it is estimated that the company's 24-year return net profit in 22nd year is RMB 367,000,000, respectively, which is + 339.0%, 72.7% and 34.4%, respectively, compared with the same period last year. The corresponding EPS is 1.45pm and 1.95 yuan, respectively. Based on a comprehensive comparison of the average PE valuation level and PE-Band fluctuation characteristics of comparable companies in the industry, we give the target price 21.75 yuan (corresponding to 15 times of 23-year PE), covering for the first time and giving a "buy" rating.

Risk tips: feed business expansion is not as expected, underfishing of eel fry, cost pressure, epidemic risk, etc.