Report summary: Shengmu is the only vertically integrated organic dairy company in China that complies with EU organic standards: Shengmu is the largest organic dairy company in China. Based on organic raw milk production, the company has a market share of 54.2%. The company is the only dairy company in China with a full-scale desert organic industry system. The company adopts a unique vertically integrated “desert full organic industry system” production model, from organic environment, organic cultivation, organic farming, organic farming, organic processing to organic products. Every step of the process strictly complies with organic standards. The whole process strictly complies with organic standards. Cows produced by Shengmu organic cow dung are supplied to Shengmu As an organic fertilizer recycling, the organic closed loop has been fully realized. Distribution has been completed in the first and second level markets. The future focus is on channel decline to cover county-level cities: Currently, the company's liquid milk products have completed distribution through the first and second tier channels, and sales performance in the Yangtze River Delta region is relatively good. Due to weak industry demand, currently the terminal has adopted a buy-one-get-one-free promotional strategy. Dealers are basically not profitable. They mainly achieve profits through stock options. The shareholding ratio is around 2%. The future focus is on achieving a decline in channels covering 300 county-level cities. Currently, e-commerce channels are mainly operated through distributors, including Tmall flagship stores, Jingdong Mall, and WeChat accounts, etc., with e-commerce accounting for about 8% of revenue in 2014. It is expected to become the world's leading organic dairy company in the long term: the company aims to become the world's leading organic dairy company in the long term: (1) expand the organic dairy farming business. By the end of 2014, the company had 19 joint organic ranches, 3 organic ranches under construction, 12 joint non-organic ranches, and the number of dairy cows was 1032.52 million, an increase of 10,000 heads in the first half of this year; (2) Improve liquid milk processing capacity and organic product portfolio. The first phase of the four liquid milk production lines will have a production capacity of 4.5 million tons/day, and the second phase will be all yogurt production lines with a production capacity of 4.5 million tons/day. 210 tons /day. In terms of the future organic product portfolio, the company plans to launch organic milk powder products in the future, mainly through e-commerce channels; (3) continue to strengthen channels and brand building. Profit forecast and investment rating: We expect the company's 2015-2017 EPS to be 0.15 yuan, 0.22 yuan, and 0.29 yuan respectively, and corresponding PE to be 11 times, 8 times, and 6 times respectively. Considering that the company is a leading enterprise in the organic dairy industry, future yogurt production capacity expansion is expected to drive the company's performance to maintain rapid growth, and coverage is given to the company's “increased holdings” rating for the first time. Risk warning: Market competition further increases risk.