Highlights of the report describe the publication of the 2016 quarterly report by Nongfa Seed Industry. Incident review: Revenue for the first quarter increased by 123%, net profit reversed losses, and EPS was 0.01 yuan. The company achieved operating income of 1.15 billion yuan in the first quarter of 2016, an increase of 123%; net profit of 3.29 million yuan, reversing losses from the previous year, deducting non-net profit of 2 million yuan, and EPS of 0.01 yuan. Increased fertilizer sales and the merger of subsidiaries were the main reasons for the reversal of losses in the first quarter. During the reporting period, the company benefited from the merger of Henan Agrochemicals and the increase in fertilizer sales, which led to a sharp increase of 123% in revenue over the same period last year. At the same time, gross sales margin also increased 1.62 percentage points to 4.04%, boosting the company's profit. Furthermore, since Henan Agrochemical, Henan Zaohua, and Wuhan Huguang Agricultural Technology combined to contribute some of the company's profits, it was able to turn a loss into a profit in the first quarter. We are strongly optimistic about the company's future development prospects. Mainly based on: (1) The promulgation of agricultural reclamation reform rules to remove barriers to the integration of land resources in reclamation areas. Among the majority shareholders of the company, Nongfa Group owns 4.3 million mu of domestic land (including 700,000 mu of arable land), and the possibility of future injection is not ruled out. Also, taking advantage of the advantages of China Agricultural Reclamation Corporation, the second-tier majority shareholder, it is expected that the company may integrate farms outside the group and participate in diversified farm equity reforms. (2) The company's strategic idea of building an integrated agricultural platform for central enterprises is clear. The first step is to form a broad pattern of seeds and pesticides through epitaxial expansion, and the second step is to strengthen it through internal integration, external research cooperation, and building a “agricultural materials+farm+storage” service platform docking model. (3) In the long run, the company's business model may form a closed loop of “agricultural materials+farm+storage” integrated industry similar to the four major international grain merchants, and the development prospects are broad. Reiterate the “buy” rating. We expect the company's EPS to be 0.25 and 0.35 yuan respectively in 2016 and 2017, giving it a “buy” rating. Risk warning: (1) the acquisition price of the company is too high; (2) the speed of service system construction does not meet expectations; (3) the agricultural reclamation reform process falls short of expectations.