Incident Starlight Agricultural Machinery released the 2015 interim report. The company achieved operating income of 353 million yuan in the first half of the year, down 3.49% from the same period last year; operating profit of 67.9079 million yuan, down 33.22% year on year; and net profit attributable to shareholders of listed companies of 58.3977 million yuan, down 32.66% from the same period last year. Key points 1. Increased competition in the industry is dragging down performance. The company achieved revenue of 353 million yuan for agricultural harvesters and accessories, a year-on-year decrease of 3.58% over the same period last year. The reason is that foreign sales revenue declined significantly due to the slump in combine harvester market demand in major exporting countries. The gross margin of the company's agricultural harvesters and accessories was 23.75%, a decrease of 7.38 percentage points compared with the same period last year. The reason is that foreign-funded enterprises are rapidly expanding production capacity in China with their quality advantages, leading to increased competition in the middle and high-end harvester market, and product sales prices have declined. The company's fees increased three times during the reporting period. Among them, management expenses increased by 38.45%, mainly due to new R&D projects generating more R&D investment and additional listing expenses; sales expenses increased by 17.67%, mainly due to the increase in dealer meeting expenses in this period. 2. Excellent companies deserve long-term attention. The company has great advantages in the field of agricultural harvesters. Continuously developing, improving and upgrading the Starlight series combine harvesters, it has formed its own differentiated competitive advantage, and will use the listing of the market as an opportunity to increase R&D investment and market development efforts and enhance its core competitiveness. 3. The agricultural machinery industry is developing rapidly, and the market space is large. China's harvesting machinery industry is in a stage of continuous rapid growth. Among them, the number of joint harvesting (cutting) machinery owned grew rapidly from 4105,000 units in 2004 to 1,278,800 units in 2012. The market-based operation of agricultural operations across regions will continue to guarantee the high growth rate of the harvesting machinery industry. The degree of mechanization of harvesting machinery in China is low, and the demand for replacement is strong. The level of mechanization of the machine harvesting process is only 44.40%, far below the comprehensive mechanization level of farming of 57.17%. With the further implementation of agricultural machinery industry policies, the overall domestic market demand will grow rapidly and there will be plenty of room, so the company's prospects are optimistic. 4. Profit forecast: The company's EPS is expected to be about 0.45, 0.64, and 0.80 yuan in 2015-17, corresponding to PE 66X, 47X, and 37X, maintaining the “recommended” rating. Risk suggests the risk of a single product structure; risk of policy changes; risk of seasonal fluctuations in production and operation