Incident: The company released its 2016 annual report, 2017 quarterly report. In 2016, it achieved revenue of 5.84 billion yuan (+75.22%) and net profit of 174 million yuan (+0.87%). The revenue growth mainly came from the warehousing business. Warehouse revenue was 2.5 billion yuan, gross profit of 53 million yuan. Excluding the warehousing business, the company's pesticide business revenue was 3.178 billion yuan, down 4.7% from 3.333 billion yuan in 2015. Gross profit was 606 million yuan, a year-on-year decrease of 7.05%. The year-on-year decline in 2016 results was due to a slump in the pesticide industry, and the company's product prices and sales were affected. In the first quarter of 2017, the company achieved revenue of 3.2 billion yuan, a year-on-year net profit of 148 million yuan, a year-on-year increase of 200%, and net profit after deduction of 89 million yuan, an increase of 89% over the previous year. The sharp rise in performance in the first quarter was due to three factors: 1. The pesticide industry picked up, prices of the company's products increased across the board, and the price of methrin rose 30%. The company's PS is highly flexible and is expected to bring about a significant increase in performance. 2. The divestment of Nongyi Network is estimated to reduce annual losses by about 2-3 million yuan, and at the same time, the divestment of Nongyi Network brings about 48 million yuan in after-tax revenue. 3. The warehousing business began to contribute profits. Production of 5,000 tons of glyphosate is expected to be put into operation in the middle of the year, which is expected to bring greater performance flexibility: According to the announcement, the company expects to start production of 5,000 tons of glyphosate in the middle of the year and is expected to be delivered in June. Currently, the price of glyphosate is still in a relatively high position under environmental pressure, and it is expected to bring about greater performance flexibility after production capacity is put into production. The first quarter is only the beginning, and the trend of improving performance may have already been established: at present, domestic environmental protection is still further tightening, and overseas pesticide demand is recovering. The pesticide industry is still improving, and the volume and price of the company's products are expected to be maintained. We believe that the change in the growth rate of the pesticide business in the first quarter is just the beginning, and the trend of improving the company's performance may have already been established. Investment advice: EPS is forecasted to $0.30, 0.38, and $0.39 in 2017-19, maintaining a buy-A investment rating. The target price for six months is 7.46 yuan. Risk warning: Glyphosate sentiment is declining, and the recovery of the pesticide industry falls short of expectations