Core view: A leading compound condiment company with strong profitability The company is a leading enterprise in the compound condiment industry. It mainly engages in five categories of products, including compound seasoning powder, natural extract seasoning, spices, sauces, and flavored soups. Compound seasoning powder is a core product, accounting for 75%-80% of revenue, with a market share of 7.6%. In 2014, it achieved revenue of 279 million yuan, an increase of 4.05%, and net profit of 57 million yuan, an increase of 7.36%, slightly lower than the industry average. Since the company's condiments have a high gross margin compared to high-end condiments, and at the same time, the marketing expense ratio is well controlled, the net profit margin is ranked second in the industry, and the profitability is strong. The company is a private family enterprise, and the main management holds more than 85% of the shares. Core competitive advantages: Continued industry boom+product structure improvement+omni-channel model 1. The total output value of Chinese condiments accounts for only about 16% of the world's condiment market, and the per capita consumption of condiments is only 1/3 of South Korea and 1/4 of Japan. We believe that the consumer goods industry still has room for at least 1 times growth. As an important sub-industry in the condiment industry, the share of compound condiments will continue to expand in the context of consumption upgrades. The concentration of the industry will further increase with food safety regulations and consumption upgrades, and the company will continue to benefit as a leader in the compound condiment industry. 2. The company will actively expand its product line and expand its revenue scale; and carry out product upgrades, using compound seasoning powder as the core product, and focus on developing two types of products with high gross margin, flavored soups and natural extract seasonings, to further enhance profitability. 3. The company's marketing network is deeply involved in central and southern China, covering 25 provinces and cities across the country, and the number of dealers has reached 415. It adopts an omni-channel model that mainly focuses on distribution channels and develops catering channels, special communication channels and overseas channels at the same time. The capacity utilization rate is currently 65%, so there is plenty of room for improvement. In the future, with the improvement of sales channels and the increase in production capacity utilization, the company's revenue scale will increase dramatically. The reasonable target price is 13.44-14.4 yuan. The corresponding PE in 2015 is 28-30 times, and the company's diluted EPS in 15-17 is expected to be 0.48, 0.57, and 0.65 yuan respectively. Referring to comparable company valuations, we gave the company a valuation range of 28-30 times, and the reasonable price range was 13.44-14.4 yuan. Risks suggest food safety issues, and “internal contraction and external expansion” exacerbate overcapacity.