Key investment points Anji Foods is a leading domestic compound condiment company, focusing on the production and sale of compound seasoning powder (accounting for 80%). The company focuses on the Central South and East China markets through a strong distribution channel system, and has built good product recognition and brand influence in the field of compound seasoning powder. The company's net interest rate is stable at around 20%. Compared with other listed condiment companies, its profitability is second only to Haitian flavor; the sales expense ratio remains below 6%, which is the lowest level of comparable companies in the industry. In 2014, the company achieved revenue of 279 million yuan, a year-on-year increase of 4.1%, and net profit of 57 million yuan, a year-on-year increase of 7.4%. The compound condiment industry has entered a golden period of development, and there is still plenty of room for improvement in the domestic penetration rate. In the past 15 years, the CAGR of China's condiment industry reached 16.69%. In 2014, the industry's output value was nearly 265 billion yuan, accounting for about 10% of the food industry. It is a typical “small product, big market”. Compound condiments are one of the nine major categories in the condiment industry. Currently, the market size is 200-30 billion yuan, and the growth rate is higher than the overall growth rate of the condiment industry during the same period. Based on the consumer experience of Japan and South Korea, there is still plenty of room for improvement in the penetration rate of compound condiments in China, and it is predicted that the market size will reach more than 35 billion dollars in the next 5 years. Looking at the competitive pattern, the domestic compound condiment industry is currently showing a “small but scattered” pattern. The market concentration is only 8.6%, which is far below the concentration level of the Japanese and US industries, and strong brands have yet to be established. The company's products are highly competitive and rank first in the segmented compound seasoning powder segment, and the revenue scale is expected to continue to increase under active channel expansion. The company's core product, compound seasoning powder, has strong competitiveness in the industry, with a market share of 7.6%, ranking first in the industry segment. There is still plenty of room to increase its market share in the future, driven by continued recovery in the catering industry and consumption upgrades. The company has a diversified product structure (more than 500 varieties), and accurately targets multi-level consumer groups in the catering industry. Low-end food and beverage consumption products account for 87%. In the future, the proportion of high-end food consumption will gradually increase, driven by new products. The company has a complete channel system, accounting for 96% of the distribution business. The marketing focuses on the two core regions of Central South China and East China, and the expansion of the epitaxial market is being actively promoted. We believe that in the future, with the launch of new products and channel expansion, the company's revenue scale will continue to increase. Raise capital to expand production of high-end products, enhance R&D capabilities, and expand marketing outlets to strengthen brand power. The company's current public offering of 30 million shares is estimated to raise a net amount of 269 million yuan for flavored bone soup product production projects, edible fungus extract and by-product production projects, R&D center construction projects, marketing network construction projects, and supplementary working capital. We believe that the company's current fund-raising project: (1) has greatly increased the production capacity and R&D capabilities of high-end products, and the company's profit side is expected to continue to increase in the future; (2) the nationwide coverage of marketing outlets will once again strengthen its channel advantage, and the revenue side is expected to continue to grow. We expect Anji Foods to achieve operating income of 291, 3.09, and 334 million yuan in 2015-2017, an increase of 4.17%, 6.37%, and 8.19%; achieve net profit of 0.64, 0.70, and 82 million yuan, an increase of 12.43%, 9.43%, and 17.65% over the previous year. Assuming that this offering does not include transfers of old shares and an additional share capital of 30 million shares, the corresponding EPS for 2015-2017 is 0.53, 0.58, and 0.68 yuan, respectively. Referring to the industry average valuation, the growth brought about by the company's increased capital strength and production capacity expansion after listing, a reasonable relative valuation is 25-30X2015PE, with a target price of 13.25-15.90 yuan. Risk warning: The construction of the company's fund-raising projects fell short of expectations, food safety issues, and increased market competition.