Incident review: The company's report for the 1st quarter of 2014 revealed that during the reporting period, the company achieved operating income of 172 million yuan, a year-on-year increase of 21.09%; net profit attributable to shareholders of listed companies was about 17.198,600 yuan, an increase of 9.71% over the same period last year (down 5.13% year on year after deduction); basic earnings per share for the current period was 0.08 yuan, an increase of 14.29% year on year. Key investment points: Expenses for the period rose year on year, eroding current profit: In the first quarter of this year, the company achieved net profit of 17.3852 million yuan, an increase of 9.09% year on year, but under the influence of factors such as the increase in short-term loans of the current period and the reduction in time deposits due to the purchase of wealth management products, net profit declined year-on-year (-5.13%); in the first quarter, the company's profit growth rate in the first quarter was far lower than the revenue growth rate for the same period (21.09%). By project, the comprehensive gross margin was about 73.55%, up 1.65 percentage points year on year. Management Although the expense ratio fell to 8.28% from 9.88% in the same period last year, the company's sales expenses rate and financial expense ratio all increased significantly during the reporting period, with increases of 3.72 and 4.82 percentage points, which eroded the company's profits to a certain extent, and was the main reason why its profit growth rate for the current quarter was lower than revenue; inventory continued to increase, and poor sales affected short-term performance: By the end of the first quarter, the company's inventory reached 684 million yuan, another increase of 209 million yuan from the beginning of the year. The company explained that it purchased red ginseng and red ginseng planting As a result of the increase, based on the disclosure of the annual report, raw materials basically account for more than 60% of its total inventory; in the company's in-depth research report released last year, we analyzed that for some time to come, the imbalance between supply and demand will still be serious, and domestic ginseng prices will still be on the rise. Under such circumstances, the company will continue to increase the inventory of raw materials and its reluctance to sell will undoubtedly affect the company's short-term performance release to a certain extent; the layout of the entire ginseng industry chain, and the amount of beverages sold: As a pioneer of “non-woodland ginseng cultivation” in China, the company relies on growing maturity. technology Continuously consolidating its advantages in terms of scale cultivation and extending it downstream to improve the layout of the entire ginseng industry chain; in February of this year, the company announced that it had obtained a GMP production certificate for Chinese medicine tablets (purified, cut). We believe that the acquisition of the certificate indicates that the company has the qualifications to produce Chinese herbal tablets, and the ginseng tablet processing project is also expected to move from planning to the implementation stage. The amount of tablets released in 2014 will be the driving force for the company's performance growth. Investment rating: According to the company's annual report and quarterly report, we temporarily adjusted the company's 14-16 EPS to 0.44/0.50/0.62 yuan respectively (the original 14-15 years were 0.52 yuan and 0.67 yuan, respectively), and the corresponding dynamic price-earnings ratios were 43, 37, and 30 times, respectively; although the company's 13-year performance was lower than our previous expectations, we believe that the company's 14-year ginseng tablet project will begin to contribute to its performance and is expected to become a core factor driving its future growth. Fluctuations in the company's short-term performance do not affect our long-term judgment on its future, so the company maintains a “buy” “Enter” rating. Investment risk: upstream cultivation risk; product price reduction risk; brand building risk.