Event: the company recently released its 2016 report that last year the company achieved 2.069 billion yuan in revenue, down 5.57% from the same period last year, 468 million yuan in main business profit, down 6.78% from the same period last year, and 75.46 million yuan in net profit attributed to the parent company, down 38.7% from the same period last year. After deducting non-recurrent profit and loss of 38.84 million yuan, a decrease of 29.75% compared with the same period last year. The net cash generated by the company's operating activities was 957400 yuan, down 98.28% from the same period last year.

Comments:

Falling sales and prices led to a sharp drop in profits: in 2016, the company's sales of alfalfa, hops, potatoes and fruits fell 2.73%, 5.09%, 3.79% and 1.72% respectively compared with the previous year, while only sunflower sales rose 4.65%. In terms of prices, only potatoes rose 0.4% in 2016, hops were basically the same as the previous year, the prices of other alfalfa fell by 0.26%, sunflower prices fell by 0.1%, and fruit prices fell by 0.44%. Overall, the decline in sales is the main reason, followed by the decline in prices. And from the point of view of the trend of price changes, the rate of price decline in 2016 is significantly smaller than that in 2015. At the same time, the impact of the company's weather disaster on agricultural products, especially fruits, last spring was an important factor in the decline in fruit production, marketing and prices.

Agricultural industrialization, integration of production, addition and marketing, and further optimization of industrial structure: in recent years, the company has further highlighted the development status of specialized subsidiaries in the whole company, focusing on the development of hops, forage grass, water-saving equipment, potatoes and food. Establish "Yasheng good Food" Food Group, on the basis of the company's original sales team, channels and market, plan marketing as a whole, promote the development of food planting industry, and link up production, processing and sales through market means; at the same time, through demonstration guidance and order radiation, expand the company's peripheral base. Each branch has established the planting structure of 2-3 leading crops and other crops as characteristic crops, the degree of crop concentration has been further improved, and the foundation for the development of leading industries has become more solid. The planting scale of the company's forage grass, potatoes and other crops has expanded steadily, the management of hops, red dates and other crops has become more refined, and the order model of chili and sunflower crops is becoming more and more mature. The establishment and operation of Yasheng good Food Group will promote the processing capacity and production line efficiency of major agricultural products such as red dates and peppers, and gradually bring a number of agricultural products with the characteristics of land reclamation and Yasheng to the market.

Through the operation of Haoshi Bang, the characteristic cash crops produced by the company will go straight to the consumer market, changing the passive situation in which the sales of the company's products are squeezed by big customers. We believe that good Food will lead the company into a new era in the future.

The company's future performance is flexible and the small year of agriculture is about to pass. Although the company has encountered many difficulties and great downward pressure in recent years, with the continuous optimization of the company's industrial structure and the improvement of the industrial level, the continuous improvement of internal management and the improvement of anti-risk ability, especially the company's layout of hops, fruits, alfalfa and potatoes will blossom and bear fruit in the next few years, coupled with the characteristics of large price fluctuations of these cash crops. In the context of inflation, both performance improvement and market opportunities will be greatly improved. The agricultural year facing the company is coming to an end.

Earnings forecast and investment rating: the company's earnings per share from 2017 to 2019 are expected to be 0.11 shock 0.13 yuan 0.17 yuan respectively (of which the 2017 and 2018 EPS forecasts are up 17% and 18% respectively over the previous report). It is predicted that the PE in the next three years will be multiple of that in 46-38-30. Considering that the company has great potential for development, we maintain the "overweight" rating of the company.

Risk factors: unfavorable changes in national agricultural policies, unsmooth strategic cooperation, changes in the management team, and so on.