The annual report results were lower than expected. During the reporting period, the company achieved sales revenue of 1.817 billion yuan, an increase of 14.13% over the same period last year; the total profit realized was 172 million yuan, down 39.16% from the same period last year; and the net profit of shareholders belonging to the parent company was 15.66 million yuan (13.39 million yuan after deduction), down 80.59% from the same period last year. Corresponding to basic earnings per share of 0.077 yuan, lower than expected. The profit distribution plan for 2011 is to increase 12 shares for every 10 shares. With heavy losses at the headquarters, Dunhuang Pioneer's profitability declined and profits declined, resulting in lower-than-expected performance in 2011.

Risk factors: the company's governance structure and operating capacity are the biggest risk factors for future performance; Xianyu 335 has entered the middle and later stage of growth, and the growth rate is more likely to slow down; there is great uncertainty about the impact of Jixiang No. 1 brand products on the promotion of authentic products.

Maintain earnings forecast and "buy" rating: we believe that under the expectation of strategic transformation, there is the possibility of bottoming out and rebounding in business operations, coupled with strong expectations of high growth in the first quarter of 2012, are expected to jointly catalyze phased investment opportunities. For the time being, we maintain the performance forecast that the EPS of Dunhuang seed industry will reach 0.60 yuan 0.80 yuan respectively in 2012 / 2013, the current price corresponds to the PE32/24 times of 2011 / 2012, and maintains the "buy" rating.