From January to September 2011, the company achieved operating income of 191 million yuan, an increase of 5.3% over the same period last year; operating profit of 45.4426 million yuan, an increase of 3.99% over the same period last year; net profit belonging to the owner of the parent company was 34.9537 million yuan, down 8.93% from the same period last year; and basic earnings per share was 0.19 yuan.

In the third quarter of 2011, the company achieved an operating income of 57.3 million yuan, an increase of 5.2% over the same period last year, an operating profit of 10.72 million yuan, and a net profit of 8.11 million yuan belonging to the owner of the parent company, or 0.04 yuan per share.

The transformation of chicken essence production line affects the output, and then affects the performance. The company is located in Puning, Guangdong Province, mainly engaged in chicken essence, chicken powder product research and development, production and sales, listed at the end of 2010. Among them, the annual production capacity of chicken powder is about 9500 tons and the production capacity of chicken essence is about 2500 tons. In the first three quarters of this year, thanks to higher product prices, increased market infrastructure, increased market development and investment, the company's gross profit margin increased by 1.7 percentage points to 38.3% compared with the same period last year. However, due to the upgrading of the production line, the output of chicken essence products decreased, thus affecting the sales revenue, the company achieved operating income of 191 million yuan in the first three quarters, an increase of only 5.3% over the same period last year.

Increase the investment in marketing, and increase the sales and management expenses accordingly. In the first three quarters, the company strengthened marketing and added sales organizations and personnel, and sales expenses correspondingly increased by 96.1% compared with the same period last year, reaching 20.17 million yuan; management expenses correspondingly increased to 17.07 million yuan, an increase of 68.9% over the same period last year; due to the repayment of working capital loans, interest expenses decreased, coupled with the increase in interest income raised by the company, its financial expenses were-12.22 million yuan.

Capacity expansion to meet the upgrading of consumption. With the continuous growth of the economy and the continuous upgrading of consumption, people's high requirements for the taste and nutrition of the diet are promoting the rapid development of the condiment industry. The sales volume of chicken essence and chicken powder in China is increasing year by year, with an annual growth rate of about 20%, and the industry is in an obvious upward channel. The company landed in the small and medium-sized board market in the second half of last year, and the funds raised will be used for the construction of 20,000 tons of chicken essence, chicken powder production base and other projects. The project is expected to reach production in the first half of 2012. After reaching production, the production capacity of the company's main products, chicken powder and chicken essence, will increase from the existing 12000 tons to 32000 tons, effectively improving the competitiveness of enterprises.

Profit forecast and investment rating. We expect the company's EPS from 2011 to 2012 to be 0.40,0.54 yuan, according to the latest closing price of 10.71yuan, corresponding to the dynamic price-to-earnings ratio of 27 times, 20 times, we maintain the company's "overweight" investment rating.

Risk hint. 1) the risk of intensified market competition; 2) the risk of food safety.