Compared to 1.0, the Young Eagle Model 3.0 is lighter in assets. The integration of industry and finance crosses the pig cycle, and performance stability has improved dramatically. Young Eagle Model 3.0 - Combining Industry and Finance, Crossing the Pig Cycle 1) The new model is lighter in assets and more capable of survival: The Young Eagle Model 1.0 was upgraded to 3.0. While improving the level of mechanization and modernization, a third party was introduced to invest in the construction and management of pig houses, while at the same time transferring a large number of existing and ongoing pig houses to reduce the size of fixed assets. The average cost of a new model farm after the transformation was reduced by 55 yuan, and the cost will be drastically reduced after the entire renovation is completed. After a very long business cycle, the industry may fall into a slump for a longer period of time, and enterprises with low liquidity and turnover ratios will face major challenges in survival. The current flow and speed ratio of young eagles is 1.78 and 1.62, respectively, which is far higher than the industry average of 1.0 and 0.5, and their viability is extremely strong. 2) Stable investment income to offset the impact of phased high farming costs: The company uses Internet big data to screen high-quality enterprises upstream and downstream of the industrial chain for strategic investment. Laying out the financial sector at a high level in the breeding market, promoting the healthy development of the industrial chain, and reducing the impact on company performance when the farming market is low will help to successfully cross the pig cycle. After more than two years of layout, the six industrial funds currently held by the company have begun to bear fruit. In 2016, the company achieved investment income of 123 million yuan, partially compensating for the adverse effects of phased cost increases during the model upgrade process. In 2017, the company will continue to promote the supply chain finance sector layout. The layout of the whole industry chain - calming down the cycle, increasing added value 1) Avoiding huge losses: In previous cycles, huge losses (100 yuan/head or more) often continued for 4 months, but at this time, if pigs were not sold, frozen meat was stored after slaughter, which could be kept for 12 months. After expiration, mature food can also be prepared for another 9 months, and even 5 years after being made into ham. As long as it survives the slump in pig prices and waits until pig prices rise before selling, preparations for falling inventory prices can be recovered. It is actually a powerful tool for calming down the pig cycle. 2) Downstream brands have begun to make profits: The company began to lay out downstream slaughter and brands in 2012. Chinamukixiang, Sanmenxia, and Tibetan pigs struggled, and finally reached an inflection point after losing money for three years. In 2016, Kaifeng young eagles and Sanmenxia ecological black pigs made profits of 15.68 million yuan and 16.01 million yuan respectively, up 72% and 229% from the previous year. Once a profit inflection point is formed, profit elasticity far exceeds income elasticity under the scale effect. Profit forecast and valuation: It is estimated that 360/500/7 million pigs will be released in 2017/18/19, with net profit of 15.0/18.3/22.3 billion yuan, giving 15-17 times PE in 2017, a target price of 7.20-8.16 yuan within one year, with room for 38-56% increase from the current price and maintaining the “Highly Recommended - A” rating. Risk warning: The return on equity investment fell short of expectations, pig prices fell beyond expectations, and the number of listings fell short of expectations.