The incident company issued an announcement that it plans to use 50 million yuan of its own capital to hold 20% of the shares of Mierle Dairy (Shanghai) Co., Ltd. through capital increases and share transfers through a wholly-owned subsidiary, Rabbi Investment. A brief review of Mile's participation in the dairy sector has taken an important step in building an ecosystem for mothers, babies and children. (1) The investment target, Melle, specializes in the original imported “Moohko McCock” brand infant formula. The original shareholders of Mille include Danish companies Danish-Showroom Holding A/S, DS MAELK A/S, ACTC HoldingAPS, and domestic companies such as Mille Investment and McCole Investment. The company's main product is “Moohko McCole Infant Formula”, a local Danish dairy brand. The company controls the entire process from product production to logistics and sales, and implements strict global testing standards in all aspects of formulation standards, production processes and colony indicators, and has obtained EU organic certification, Denmark Organic certification and Chinese organic certification. The company's products are imported and sold in original cans. Sales were carried out through direct online channels. The revenue for 2015-2016 was 59.81 million yuan and 126.2 million yuan, respectively, and net profit was -9.17 million yuan and 7.92 million yuan respectively, achieving rapid growth. According to the announcement, Mialer promised to achieve net profit of 25 million yuan and 40 million yuan respectively in 2017-2018. (2) Participate in Mierle to expand product categories, and it is expected that offline channels, marketing, etc. will form a synergy effect. We believe that the company's participation in Merle has, on the one hand, extended and enriched the company's existing product categories, which are beneficial and complementary to the existing business, adding bricks and tiles to the construction of the company's “mother and child” ecosystem; on the other hand, using the company's strong offline channel resources in China (more than 1,300 offline brand stores/cabinets) and influence (for example, it can find strategic partners for offline layout) to promote the rapid development of Mierle's products in the domestic business. There are still industry dividends, and the comprehensive ecosystem layout is progressing steadily. The domestic maternal and child market has exploded in recent years, benefiting from the increase in the birth population brought about by the prenatal policy and the promotion of consumption upgrades. In 2016, full two-child births were officially implemented, and the annual number of births rebounded to 18.46 million, an increase of 11.5% over the previous year. We predict that in 2017-2020, the number of new births will continue to grow at a CAGR rate of 4.3%, and with changes in consumption habits due to consumption upgrades and the increase in the share of parents after 80/90, we believe that high-end consumer products for infants and young children will usher in room for development. As a well-known enterprise in the domestic high-end infant apparel cotton and daily necessities market, the company is facing an unprecedented opportunity for development. The growth rate of the company's 2017-Q1 performance accelerated, and the comprehensive ecosystem layout for mothers, children and children continued to advance. The growth rate of the company's revenue and performance rebounded. Among them, 2016 Q4 achieved operating income of 125 million yuan, up 19.77% year on year; net profit of 236.963 million yuan, up 25.42% year on year; 2017 Q1 company achieved operating income of 89.013,400 yuan, up 9.09% year on year; realized net profit of 1,70665 million yuan, up 17.16% year on year, mainly in the context of improving terminal demand, the company continued to promote store expansion, sales volume and gross margin. Moreover, the company has made active layout preparations in terms of product category expansion — selling children's toys from Ferrari cars and baby bottles from British Bfree, and developing investment strategies — investing 19 million yuan to establish a wholly-owned subsidiary “Guangdong Golden Rabbi Investment Co., Ltd.”, and plans to invest 225 million yuan to subscribe for shares in the Asia-Pacific International Maternal, Child and Child Industry Fund through the wholly-owned subsidiary “Rabbi Hong Kong”. Investment suggestions: The company has a comprehensive layout of the infant industry chain. The first target to benefit from the high growth of the infant industry after the liberalization of the two-child policy is scarce. The main business is solid and steady, with brand advantages and technical advantages. The investment platform has been successfully built to facilitate the future expansion of high-quality baby-related businesses, and actively achieve the strategic goal of a comprehensive ecosystem for the mother, child and child industry covering the six major fields of “food, clothing, use, play, culture, education, and health care.” We expect net profit for 2017-2018 to be 8107 million yuan and 92.84 million yuan, up 11.4% and 14.5% year on year, corresponding to EPS of 0.40 and 0.46, and corresponding to PE of 59 and 51 times. Considering this investment, the 2017-2018 exam preparation profits are 8607 million and 10.84 million, corresponding to EPS 0.43 and 0.50 yuan, corresponding to PE 55 and 47 times, with a current total market value of 4.772 billion yuan, maintaining the “increased holding” rating. Risk factors: The performance of the M&A target falls short of expectations, and the rapid development of the infant industry has led to increased future competition; the implementation of the two-child policy falls short of expectations; the risk that offline channels will be impacted by e-commerce expansion; the outsourcing production capacity and quality of some of the company's products do not meet requirements.