Investment points: the company is a wine production and sales-based enterprises, the main market is located in East China. With the fund-raising project put into production, the company's production capacity will be improved, and it is expected to expand its advantages in the field of organic wine. In the future, the company aims to add 174 new marketing outlets across the country and steadily expand the nationalized marketing network of Weilong shares.

East China has obvious advantages to create characteristic products of organic wine. The company's main business is wine grape cultivation, wine production and sales, the main varieties are traditional dry red wine / dry white wine, organic dry red wine / dry white wine, Veyron legendary grape liquor and other products. In 2015, the company's operating income was 738 million yuan, an increase of 3.34% over the same period last year, and the company's net profit was 41.8083 million yuan, an increase of 18.47% over the same period last year. In the company's main business income, the traditional wine income is 391 million yuan, accounting for 54.01%, and the organic wine sales income is 279 million yuan, accounting for 38.54%. From a regional point of view, East China is the company's focus and advantage market, with 15-year sales revenue of 530 million yuan, accounting for 73.14%.

The revenue growth rate of the wine industry is expected to maintain rapid growth, and the concentration of the industry is further enhanced. In 2013, China's wine consumption market has undergone significant changes, the sales of high-end wine has declined greatly, and imported wine has also intensified the competition in the domestic wine industry. In 2013, the revenue of over-sized wine enterprises fell 6.91% from the same period last year. Since 2014, the wine industry began to pick up slowly. The income of above-sized enterprises was 42.057 billion yuan, up 3.04% from the same period last year. Ting continued to recover in 15 years, up 10.17% from the same period last year. Among the many wines, due to the healthy and fashionable characteristics of wine, wine consumption in China will continue to grow rapidly in the future. By the end of 2015, there were 219 wine production enterprises above the national scale, with Changyu, which has the largest market share, less than 15%, and the concentration of the industry is expected to further increase in the future.

To meet the needs of the concept of healthy consumption, focus on the development and promotion of products with high gross profit margin. In 2009, in order to achieve differential competition, the company launched a new product organic wine in line with the concept of healthy eating for consumers. Now, the company has become a leading organic wine production and sales enterprise, undertaking the key project "Organic Wine Grape production and processing key Technology Development and demonstration Project" of the Ministry of Science and Technology of China. The company's organic wine grape planting base located in Wuwei, Gansu Province provides the company with organic wine raw materials. After market cultivation in 2010 and 2011, organic wine sales revenue increased significantly in 2012, and organic wine sales were also affected to a certain extent due to the ups and downs of the industry. As the industry gradually recovers, sales of organic wine grew by 2.18 per cent in 2014 and 2.87 per cent in 2015. The annual gross profit margin of organic wine is 62.83%, which is higher than the company's comprehensive gross profit margin of 4.34pct.

The proportion of dealer model is increasing year by year, and the e-commerce channel is improving steadily in the future. The company has established a "dealer model + large-scale merchant super direct sales model", basically covering the national marketing network. Dealers are the main sales channel of the company, accounting for 93.57% of sales revenue. The company has sunk the channel to the county and city level in the advantageous sales area, realizing the flat management of the marketing network. Due to the weak growth of Shang Chao direct sales channel, high cost and long time of capital occupation, the company has appropriately reduced the cost of Shang Chao channel in recent years. however, the company still maintains a long-term and stable cooperative relationship with Walmart Inc, Metro, Carrefour, Da Runfa and other large supermarket chains. At the end of 2014, the company also launched the e-commerce sales model. Strengthen the management ability of retail terminals through continuous channel construction and maintenance.

Fund-raising projects: expand the production capacity of organic wine products and upgrade the marketing network. The company plans to issue no more than 50.2 million common shares this time, and the total capital raised after the issue will be mainly used for 40,000 tons of organic wine production projects, 18000 mu organic wine grape planting projects, marketing network construction projects and repayment of bank loans. The average annual sales income of the 40, 000-ton organic wine project is 574 million yuan, the average annual after-tax profit is 96.0234 million yuan, and the financial internal rate of return after income tax is 28.53%.

Profit forecast and investment advice. Based on the issuance of 50.2 million shares, the total share capital after the issue is 200.2 million shares, corresponding to the diluted EPS0.21 yuan in 2015. We estimate that the EPS of the company in 16-18 years will be 0.25 24xPE 0.29 yuan 0.32 yuan respectively. With reference to the PE valuation of comparable listed companies, and considering the premium level of new shares issued, the company will be given a price range of 18-100 yuan in 2016, corresponding to a price range of 4.60-6.00 yuan.

The main uncertain factors. The economic slowdown is a drag on consumption, food safety problems and increased competition for imported wine.