Incident 2011.07.04 The company issued a performance correction announcement. Net profit for the first quarter of 2011 was 17.525 million yuan, earnings per share, an increase of 44%, net profit of 14.5 million yuan before correction, and earnings per share of 0.145 million yuan. The review company has benefited from high industry prosperity and policies to support pig breeding, and has entered a boom cycle since July 2010 (currently the average price of pork pigs listed nationwide is 19.46 yuan/kg, 10.55 yuan/kg in the same period last year, an increase of 84.5% over the same period last year. The price of pork was 29.87 yuan/kg, compared to 16.13 yuan/kg in the same period last year, up 85.2% year on year. The price of piglets was 42.1 yuan/kg, up 158% year on year; the price of sows was 1,839 yuan/head, up 42.3% year on year). Since the pig growth cycle lasts about one year, it is expected that the boom in the pig market will continue until around March 2011. Currently, the average profit of self-breeding and self-raised head pigs in the industry has reached more than 600 yuan, which is in a period of high prosperity. The company is mainly engaged in pig breeding business (breeding pigs, piglets, and fattening pigs), and is ranked second in Hunan, a major pig farming province. Because of its prominent role in the construction of new rural areas, it has received special support from the government (tax relief, breeding subsidies, breeding subsidies, etc.). Expanding the industrial chain, ensuring food safety, and stabilizing profits Pigs are typical agricultural products. Prices fluctuate drastically due to market influence, and the simple pig breeding business faces great risks. The company has built a whole industry chain from feed, breeding pigs, and fattening pigs to slaughter, processing, and pork distribution, which is conducive to ensuring food safety and also smoothing swings in pig prices to obtain stable profits. Among them, profits from pig breeding, feed, and slaughter and distribution are relatively stable. We believe that in the future, the company will not only enjoy the booming pig breeding industry's breeding profits, but also obtain better profits from slaughter, processing, and sales during the downturn in the farming industry. Excellent pork quality, rapid growth in breeding scale. The company is located in Huaihua, Hunan, backed by the Xuefeng Mountains. The new farm was built in sparsely populated mountainous and semi-mountainous areas. The air and water sources are not polluted, and the distance between bases is large, which can effectively avoid continuous infections. The company's pig quality has a unique advantage. The “company+base+large breeder+farmer” that the company has successfully operated for more than 10 years has developed the commercial pig business model, management model, technological advantages, and epidemic prevention guarantee advantages, and has promoted the rapid expansion of the company's breeding scale (the company's compound revenue growth rate in 2007-2010 reached 56%). Profit forecast and rating: In view of the continued rise in pork prices, we have raised the company's profit forecast. We expect the company's 2011-2013 EPS (after full dilution) to be 0.54, 0.58, and 0.73 yuan, maintaining the company's investment rating for increasing holdings. Risk warning: risk of the epidemic, risk that pork prices will fluctuate beyond expectations