Incidents: Recently, the company announced its 2013 annual report and 2014 quarterly report. In 2013, the company achieved revenue of 2,337 billion yuan, a year-on-year increase of 4.04%, and main business profit of 561 million yuan, a year-on-year decrease of 1.93 percent, net profit attributable to the parent company of 380 million yuan, a decrease of 15.98%, a decrease of 15.98%, earnings per share of 0.2 yuan, and cash flow from operating activities of 0.19 yuan per share. In the first quarter of this year, the company achieved revenue of 494 million yuan, an increase of 5.47% over the previous year, a profit of 103 million yuan from its main business, an increase of 5.37% over the previous year, net profit attributable to the parent company of 53.87 million yuan, a decrease of 3.77% from the previous year, earnings per share of 0.03 yuan, and cash flow from operating activities of 0.07 yuan per share. Comment: Increased revenue does not increase profit. In 2013, against the backdrop of a continuous decline in prices of agricultural products, especially cash crops, the agricultural sector, which accounted for 88.1% of the company's revenue, achieved revenue of 2,028 billion yuan, a year-on-year increase of 5.82%, and a gross profit ratio of 24.41%, a decrease of 2.33 percentage points; the industrial sector, which accounted for 6.7% of the company's revenue, had revenue of 154 million yuan, an increase of 5.3% over the previous year, and a gross profit margin of 27.12%, a decrease of 0.17 percentage points; the trade sector, which accounted for 5.1% of the company's revenue, fell by 23.4%, and the gross profit ratio of 12.08%, increased by 12.08%, 6.98 percentage points; other business revenue, accounting for 0.1% of the company's revenue, was 2.86 million yuan, a year-on-year decrease of 16.14%, and gross margin of 25.4 percent, an increase of 0.72 percentage points. In 2013, agriculture, industry, trade and other businesses contributed 89.7%, 7.6%, 2.6%, and 0.1%, respectively. The 5.82% increase in revenue in the agricultural sector failed to offset the 9.19% increase in operating costs. The reason for this is still the decline in agricultural product prices, such as potatoes, alfalfa, beer barley, and melon and fruit products. Costs increased during the period. The corporate fee rate for the period in 2013 was 9.5%, up from 8.9% in the previous year, of which the management expense rate was 6.3%, up from 5.8% in the previous year. The company's expenses for the first quarter of 2014 were 8.56%, up from 7.17% in the same period last year. Among them, management expenses rose from 5.25% in the first quarter of 2013 to 7.18%. We judge that the increase in management expenses is related to the expansion of the company's operating scale and the increase in business activities. The continued progress of the unified business model fell slightly short of expectations. Although the company continues to promote a unified business model, the overall speed is slower than expected. Especially in the context of unfavorable market conditions, the difficulty of unified management and promotion may be increasing. The construction project for the 300,000 mu high-efficiency agricultural water-saving drip irrigation project was delayed because the funds raised were received late and the installation season was missed; the modern agricultural drip irrigation equipment production and construction project reached the intended state of use in December 2013; and the 200,000 mu alfalfa base has been built to 80,000 mu. The cowshed for the 30,000 head dairy farming project has been completed, and the introduction of breeding has begun. Profit forecast and rating: Affected by falling agricultural product prices, and the company's new projects are generally in the operation and construction period, the company's growth rate is lower than expected. Despite this, the company's unified business model and the pace of expansion of the industrial chain have not changed. The company is still at the stage of consolidating the foundation for development. As prices of agricultural products rise and the company's new construction projects are completed and produced one after another, the company still has strength for future growth. We expect the company's sales revenue for 14-16 to be 26/30/33 billion yuan, respectively, and net profit attributable to the parent company of 4.2/5.2/560 million yuan respectively. The corresponding company's earnings per share from 2014-2016 are 0.22 yuan, 0.27 yuan, and 0.29 yuan, respectively. Of these, the predicted EPS for 2014 and 2015 decreased by 41% and 38% respectively from the previous report. The price-earnings ratios corresponding to the closing price of April 28, 2014 (5.84 yuan) were 28 times, 23 times, and 21 times, respectively. In view of the fact that agricultural product prices are difficult to improve in the short term, land transfer is due to state-owned enterprise reform, and the fact that company construction projects have not been effective in recent years, the company's rating was lowered to “increase holdings.” Risk factors: agricultural product prices continue to be low, the company's new construction projects and unified business area are lower than expected, and the unified business model is at risk.