1. Pig prices have risen rapidly, and will remain high in the second half of the year. The company's profitability has increased dramatically. Since May, pig prices have risen sharply. Prices of piglets and pork pigs have reached 32.32 and 18.94 yuan/kg respectively, up 125% and 90% from the previous year. Since the market slump last year was due to the massive withdrawal of farmers and the ongoing impact of the epidemic on the survival rate of sows and piglets, the current inventory volume is clearly below normal. There has been a recent recovery in inventory, but it will take 9-12 months for obvious results, so we expect pig prices to remain high until the Spring Festival next year. As a leading breeding leader in the western region of Xiangxi, the company listed 160,000 and 220,000 pigs respectively in 2009-10. It is estimated that a total of about 300,000 heads will be released this year, mainly piglets. Pig prices have risen sharply this year. In particular, piglets have risen the most this year, and the company's profitability will increase dramatically. 2. The improvement in the breeding market has brought important opportunities for the company to expand through foreign acquisitions. After the company went public, it will make foreign acquisition of pig farms a strategic priority. The farming market has fluctuated drastically in recent years, and small to medium farmers have suffered greatly. Many people are fearful of the farming industry, yet they are unwilling to quit after losing money. The recent rise in the farming market has just given these people a chance to retreat; several core members of the company's management are from the military, and their style of work is aggressive and popular. They have seized this opportunity to acquire surrounding pig farms at a price lower than the assessed value of assets. The acquisition of surrounding pig farms for 24.8 million yuan is one example of Shengwangda Pig Farm, which has an assessed price of nearly 30 million yuan. The acquisition of existing pig farms can, on the one hand, save the capital invested by the company, and on the other hand, shorten the construction cycle, so that the pig farm can generate benefits in a short period of time. However, there are no other large breeding enterprises in Xiangxi, Guizhou, Guangxi and other regions around where the company is located, and there are many small to medium farms, leaving huge room for the company to expand its foreign acquisitions. 3. If the level of management refinement can be raised, there is still plenty of room for improvement in gross margin. After going public, the company has done a lot of work to expand the scale of production and sales, and the management level has also improved, but compared with other companies in the industry, such as young eagle farming and animal husbandry, there is still room for improvement in terms of refinement. For example, in cooperative farming with farmers, there is a difference in the settlement model of the two companies: young eagles measure breeding results by the weight of farmers' pigs raised, while Dakang only calculates by the number of heads. Obviously, the accounting method for young eagles is more detailed. This is also an important reason why young eagle farmers have strong enthusiasm, strong sense of responsibility, and high efficiency in breeding, and the end result is: the gross margin of young eagle farming is greatly leading (of course, the low cost of raw materials for young eagle feed cannot be ignored). In our research, we learned that the company is also gradually improving the level of refinement. For example, it has set stricter meat ratio standards for farmers: 2. 9:1, which is significantly lower than the breeding level of ordinary farmers, and urges farmers to save feed. If the company can make every effort to refine management in the future, we think there is still plenty of room for improvement in the level of gross margin. 4. Investment recommendations Recently, pig prices have soared, and the active breeding sector has brought trading opportunities: we expect the breeding industry to continue to be prosperous in the second half of the year, the company's pig product profit level will rise sharply, and the newly acquired pig farm will generate revenue in the short term. The 400,000-ton slaughterhouse will be put into operation in the fourth quarter, and will gradually contribute profits next year. Earnings per share for 2011-13 are expected to be 0.38, 0.54, and 0.73 yuan. The short-term valuation is not low, but considering that pig prices continue to rise, the pig breeding sector is generally active, and there are trading opportunities. Risk warning: The cost of feed raw materials has fluctuated greatly, and the aquaculture industry has experienced a major epidemic