Dairy enterprises in the entire industry chain, holding only two infant formula production licenses in the country. At the beginning of the listing, the company was only a supplier of raw milk, but now it has developed into a large-scale dairy enterprise in the entire industry chain integrating comprehensive utilization of forage - breeding of good animal breeding - livestock breeding - processing and sales of dairy products and meat products. Huayuan Dairy, a holding subsidiary of the company, and Ximu Dairy, a wholly-owned subsidiary, are the only two dairy companies in China that have the qualification to produce infant formula. They can enjoy the dividends of increasing milk powder consumption brought about by the two-child policy. The price of raw milk is expected to bottom out and rise, boosting the profitability of the company's fresh milk business. We believe that domestic raw milk prices have bottomed out, and the probability of reaching a new low is extremely low. It is expected that next year will usher in a new upward cycle. The core logic is that domestic and foreign farming industries generally lose money, leading to a continuous contraction on the supply side. Western Animal Husbandry is the dairy company with the largest number of dairy cows in A-shares. The rise in raw milk prices can not only boost the profitability of the company's fresh milk business, but also benefit its dairy business from cost advantages. It is undoubtedly the biggest beneficiary of the rise in raw milk prices in A-shares. The layout of the beef cattle business. The “Isolated Slaughter Project for Importing 100,000 Australian Cows a Year” is about to be put into operation. The company is a frozen meat national reserve and storage enterprise. The wholly-owned subsidiary Calwan Foods specializes in the slaughter of cattle and sheep, and has a production capacity of 50,000 heads of cattle and 1 million sheep per year. The company has the largest purebred “Red Angus” beef cattle population in the northwest region, and has its own beef cattle breeding scale of about 10,000 heads. The “Quarantine and Slaughter Project for 100,000 Australian Beef Cows Imported a Year” in Cixi, based on the company's subsidiary Zhejiang Yiheng Animal Husbandry, is expected to be put into operation by the end of this year. Its cost advantages and location advantages will help the company expand the beef market in East China and the whole country. The project is expected to become a new profit point for the company. The company is actively raising funds to repay high loans, and the pressure on financial expenses is expected to be overcome. As of the end of June this year, the company still has short-term loans of 932 million yuan. We believe that the financial cost pressure brought about by the company's high short-term loans can be gradually lifted. First, as of the end of June, the company had 289 million yuan in debt, and its repayment could be used to repay part of the company's short-term loans. Second, after allocating shares, the company may once again use equity financing to repay short-term loans. Finally, government grants can also be used as a source of repayment. Profit forecasts and investment recommendations are based on the above analysis. We believe that the company's performance is expected to bottom out this year and begin to pick up next year. Since it is impossible to predict the future slaughter volume of Yiheng Animal Husbandry, we consider the contribution of its performance as a flexible consideration. Without considering the impact of Yiheng Animal Husbandry on the company's performance, we make both conservative and optimistic predictions about the company's performance. Conservatively, the company's 2016-2018 EPS is -0.20, 0.10, and 0.22 yuan/share, respectively; optimistically, the company's 2016-2018 EPS is -0.15, 0.18, and 0.32 yuan/share, respectively. Although it will take time for the company to turn a loss into a profit, the market has strong expectations for the price of raw milk to rise, and Western Animal Husbandry, as the listed company with the largest scale of dairy farming in A-shares, has become the focus of market attention. Currently, the company's market capitalization is only 3.67 billion yuan. We believe that the company is on the cusp of rising raw milk prices, combined with expectations that performance will bottom out and pick up. Its stock price is extremely flexible, giving it a buying rating, and the target price is 22 yuan.