Key investment points: Investment ratings and valuations: The nucleotide prices in the main business are hovering at the bottom, companies within the industry have begun to seek cooperation, and positive signals have begun to appear. Xinghu Technology has the characteristics of an early inflection point. The company is gradually divesting its other assets and focusing on its main business. The company is a state-owned holding enterprise. If the mechanism is improved in the future, it will further stimulate the company's momentum. A left-hand layout is recommended. EPS is expected to be 0.03 yuan, 0.13 yuan, and 0.15 yuan respectively in 13-15. The growth rates are: reverse loss, 404.5%, and 26.8%, respectively. The current stock price corresponds to 186.7 times, 43.1 times, and 37.3 times PE in 13-15. Since the profit elasticity of the company's main business is relatively high, the current PB is only 2 times, while the PB of general condiment companies is around 4 to 8 times. The company is currently at the bottom, and there is a lot of room for future improvement, giving it a “gain” rating. Key assumptions: In 13-15, assuming that the company's nucleotide revenue increased by -5.4%, 12.5%, and 22.2%, respectively, API revenue increased by 6.06%, 8.57%, and 18.42%, respectively, and feed and other business revenue increased by -10%, 0%, and 0%, respectively. It is different from public perception: 1) The nucleotide market: Dawning is dawning, the competitive environment in the industry is slowing down, and demand is growing steadily. The nucleotide business has shown positive signs. Currently, the actual production capacity of the industry is 40,000 tons and the demand is around 30,000 tons. Prices are hovering at the bottom (down from a high of 300,000 yuan/ton to about 60,000 yuan/ton). Under low prices, the entire industry has lost money for two years. Companies are suffering and have begun to seek ways to cooperate. Some foreign companies have begun to cut production, and the demand for downstream food companies is growing steadily, so it can be judged that as the competitive environment of the industry slows down and demand grows steadily, there is less room for future nucleotide prices to rise. 2) API business: Active layout with room for further development. In the pharmaceutical business, a pharmaceutical development center has been set up. The direction is the biomedical industry. The strategic investor to be introduced in the near future is Shenzhen Changcheng Huili Asset Management Co., Ltd., which has successful experience in operating the pharmaceutical industry, and is expected to have a positive impact on the company's pharmaceutical business development. The revenue and profit of the API business are relatively stable, and the contribution to the company's performance is expected to increase steadily. 3) The company gradually divests its negative assets and focuses on its main business. The company's original business was quite complex. Since starting in 2013, it has gradually divested other businesses such as real estate and fructose, focusing on the biological fermentation industry chain. Nucleotides, APIs, and feed are all R&D and application based on biological fermentation engineering. We approve the management's idea of focusing on the main business, and microbial fermentation can be applied to a wide range of applications. 4) State-owned enterprise reform is expected, if the mechanism is improved, it will further stimulate the company's momentum. 2014 is the first year of the full launch of a new round of reforms. Guangzhou and Shanghai are pioneers in state-owned enterprise reform. Judging from the reform path, in order to expand and strengthen state-owned enterprises, it is expected that Guangdong Province and Guangzhou Municipal Group will take the lead in future reform efforts and progress, focusing on companies under the four major provincial holding platforms of Guangxin, Guangsheng, Guangye, and Guanghong. The actual controller of Xinghu Technology is the Guangdong Provincial State-owned Assets Administration Commission. The largest shareholder is Guangxin Holding Group Co., Ltd., with a shareholding ratio of 17.52%. If the reform of state-owned enterprises in Guangdong progresses smoothly and the company system is optimized, it will further stimulate the company's motivation to move forward. The catalyst for stock price performance: rapid recovery in nucleotide prices, progress in state-owned enterprise reform in Guangdong. Core hypothetical risk: the price of nucleotides continues to fall.