The incident company issued an interim report: it achieved operating income of 288.77 million yuan, a year-on-year increase of 23.72%; net profit attributable to shareholders of listed companies was 27.65 million yuan, a decrease of 19.97% over the previous year; and earnings per share of 0.11 yuan. Release of performance forecasts: Net profit attributable to shareholders of listed companies declined by 10-40% from January to September. Comment 1 The increase in revenue and the decline in gross margin affected the increase in performance revenue: Affected by the weather at the beginning of the year, the birth rate and survival rate of young pigs in the country declined, and the number of young pigs kept in the market was insufficient, and the price of young pigs increased significantly compared to other breeds. The company listed 55,000 young pigs, an increase of 42.89% over the same period last year; after the scale was expanded, the sales volume of fattening pigs and breeding pigs increased 10.95% and 11.70% respectively from the same period last year. Decline in gross margin: Mainly affected by various factors such as rising raw material prices, rising production costs, and falling external market demand, etc., due to a sharp drop in pig prices and continued operation at low prices; losses in slaughtered meat products were due to the fact that Dakang Foods was in the market development stage, profitability was weak, and overall gross margin fell 1.4 percentage points. 2. The cost rate for the three categories doubled to 4.94%, compared to 2.34% in the same period last year. The main reasons for the sharp increase: management expenses increased 96.52% over the same period last year due to increases in depreciation, wages, hospitality, and brokerage expenses, and financial expenses, and financial expenses increased 133.41% over the same period last year due to increased interest on loans. 3. It is expected that the industry will improve slightly in the second half of the year, but it is still sluggish, and the survival rate of young pigs will return to normal in the first three months of the year. Currently, the stocks of pigs in the main pig production areas are still quite adequate, making it difficult for short-term pig supply to decrease rapidly. However, in the second half of the year, the Mid-Autumn Festival and National Day periods are the peak season for pork consumption, and market demand will increase. It is expected that the rise in pig prices nationwide will be obvious in the second half of the year, but the increase is limited. At the same time, the US drought has led to a reduction in corn production, and it is expected that corn prices will reach record highs, thereby increasing breeding costs and affecting the operating performance of the pig farming industry in the second half of the year. 4. Profit forecasting and investment rating After the company's slaughter and processing projects are gradually put into operation, it will help the company buy pigs for slaughter and freezing when pig prices are low, sell them when prices rise, calm and stabilize pig prices in the local market, and enhance the company's profitability. We believe that as the company's farming scale increases and the slaughter business begins to contribute profits, the 2012-2014 EPS is expected to be 0.28, 0.33, and 0.46 yuan, corresponding to PE 24, 20, and 15 times, maintaining an investment rating of “increased holdings”. 5 Risk factors: risk of large swings in pig prices, risk of the epidemic.