Incident: The company announced on July 26 that the company successfully won the bid for the “Shenyang Meat and Vegetable Distribution Traceability System Construction Pilot (Phase I) Integrated Package” project, with a bid amount of 39.98 million yuan. Comment: Winning the bid for the Shenyang pilot project is significant. The “13th Five-Year Plan” food was registered ahead of schedule to trace the 10 billion dollar market. Following the Ministry of Commerce's nationwide pilot, Liaoning Province is the first region to carry out traceability of meat and vegetable circulation throughout the province. It is expected that Shenyang will be used as a pilot to complete a traceability system covering the whole province in 2020. Distribution traceability is an important part of the national strategy for food safety. During the “13th Five-Year Plan” period, pilot cities will gradually spread to thousands of counties and cities, and the 10 billion market is worth looking forward to. With the establishment of Taocai Cat and the strategic layout of food traceability “last mile”, a comprehensive upgrade of the business model is of great significance. The company leverages the advantages of city-level traceability platforms and uses “scavenging cats” as a starting point to deploy downstream on the C-side, upgrade the business model, and open up revenue space. Taking Shanghai as an example, the city's annual agricultural product terminal consumption is conservatively estimated at about 200 billion yuan, and the theoretical profit margin of a third-party traceable O2O trading platform will exceed 2 billion yuan. Bidding has been won continuously, and the growth rate of performance may have reached an inflection point. According to the winning bid information for online procurement information development of the Chinese government, it won a total of 88 million yuan in bids from January to July 2015, and nearly 200 million yuan in bids from January to July 2016, of which nearly 110 million yuan was won for food traceability. As a leader in food traceability, the company is in the trillion-dollar “food” market, which is extremely scarce. Investment advice: As a leader in the field of food traceability, the company responds positively to the national food safety strategy. The establishment of Taocai Cat is an important layout for the company in the field of food traceability, which will help open up revenue space and upgrade the business model. Considering its steady development in archives and judicial informatization, we are optimistic about the company's long-term development. The 2016-2017 EPS is expected to be 0.80 or 1.00 yuan, maintaining the “buy-A” rating, and the target price for 6 months is 140 yuan. Risk warning: Baocai Cat's operation falls short of expectations