From January to December 2011, the company achieved operating income of 10.69 billion yuan, an increase of 43.9% over the same period last year; operating profit of 180 million yuan, an increase of 96.5% over the same period last year; net profit belonging to the owner of the parent company was 120 million yuan, an increase of 105.2% over the same period last year; diluted earnings per share was 0.28 yuan; distribution plan: dividend of 1.0 yuan (including tax) for every 10 shares. From January to March 2012, the company achieved operating income of 2.73 billion yuan, an increase of 47.3% over the same period last year; net profit belonging to the owner of the parent company was 40 million yuan, an increase of 146.6% over the same period last year; and diluted earnings per share was 0.09 yuan.

Feed business "small profits and quick turnover". The company is mainly engaged in feed production and pig breeding. During the reporting period, the company's feed business adopted the strategy of "small profits and quick turnover". Feed sales reached 3.53 million tons, an increase of 48 percent over the same period last year, of which the full price was 3.11 million tons, up 43 percent over the same period last year; feed revenue was 9.07 billion yuan, up 40.7 percent over the same period last year; but the feed gross profit margin was only 3.75 percent, down 1.6 percent from the same period last year, and the gross profit per ton of feed dropped to 96 yuan from 144yuan in 2010, the lowest in history. The decline in feed gross profit margin is mainly due to the decrease of 2.36 percentage points to 1.47% of the gross profit margin of full-price materials; as for the reasons why the gross profit margin of full-price materials is as low as 2 percentage points, we think that one is that the company adopts the strategy of "small profits and quick turnover" to increase market share; second, the price of raw materials has risen (corn is up 15% year on year).

The prosperity of the industry is high, and the breeding business has become a bright spot. During the reporting period, the pig market was booming, and pig prices reached a record high of 16.88 yuan / kg, up 48% from the same period last year. Under the high demeanor of the industry, the company's breeding business developed rapidly, and the value chain construction of the whole pig industry developed and extended healthily. During the reporting period, the sales volume of live pigs was 710000, an increase of 70% over the same period last year, the income of breeding business was 1.23 billion yuan, an increase of 86% over the same period last year, and the proportion of gross profit of breeding business increased from 30% in 2010 to 52%. The company's breeding business became a big "bright spot" in 2011. For the overall trend of 2012 pig prices, we still tend to show a downward trend, but the expansion of the company's breeding scale can make up for the decline in prices. We expect the company to produce 100-1.1 million pigs in 2012, and the breeding business in 2012 is still worth looking forward to.

In 2012, the feed industry entered a boom cycle. Judging the feed situation in 2012, we believe that the situation in the feed industry in 2012 is better than that in 2011, and the company's feed gross profit margin is expected to improve (the specific reason is mentioned in the report that a reasonable decline in pig prices is often more beneficial to feed companies' profits).

Profit forecast and investment rating. It is estimated that the earnings per share in 2012 and 2013 are 0.45,0.66 yuan respectively. Based on the closing price of 10.39 yuan on April 25, 2012, the corresponding dynamic price-to-earnings ratio is 23 times and 16 times respectively, maintaining the company's "overweight" investment rating.