Investment Highlights The company released its 2013 mid-year report, achieving operating income of 273 million yuan, a year-on-year decrease of 3.2%; net profit attributable to shareholders of listed companies was 224 million yuan, up 1371.7% year on year; basic earnings per share were 0.524 yuan, up 1372.5% year on year; net profit after deducted 400,000 yuan, down 97.2% year on year; net cash outflow from operating activities was 38.29 million yuan, a net outflow of 13.37 million yuan in the same period last year. The sharp increase in net profit from reviews is due to asset disposal income: the company established a development strategy to divest non-main businesses and focus on the two main businesses of fishery products and liquor. In the first half of the year, it sold 48.92% of Shanghai Hongxin Real Estate Co., Ltd.'s shares and received 257 million yuan in investment income. After tax deductions, it still had a significant impact on medium-term profits. The company's three expense ratios increased by 2.37 percentage points: the company's sales expenses were 21.1 million yuan, an increase of 0.98 percentage points over the previous year, mainly due to an increase in employee benefits; management expenses of 43.5 million yuan, an expense ratio of 15.57%, an increase of 1.36 percentage points over the previous year, mainly due to an increase in surrender management fees; we believe that the increase in sales expenses is beneficial to the long-term development of the company. The increase in management expenses is mainly beneficial to the management and maintenance of the company. Revenue from aquatic products fell 8%: the company reported revenue of 179 million yuan, a year-on-year decrease of 8.3%, lower than our expectations. Mainly, sales of high-end fish products declined and prices stagnated due to the three major consumption policies, but we are still optimistic about the company's main aquatic products business. We believe that the company has gradually switched from focusing on resource acquisition in the past to using existing resources. Currently, the company has 1.8 million mu of freshwater aquaculture water. Since it completely uses a natural stocking model and extensive management, the production of aquatic products per unit of water is only 1/10-1/30 of pond aquaculture production. In the future, the company can adopt measures that do not change the principle of natural growth, such as putting fry in the Great Lakes, improving varieties, etc., and there is still great room for improvement in aquatic product production. As fishing is becoming increasingly difficult at present, aquaculture waters are being polluted, the supply of aquatic products will become increasingly difficult. At the same time, due to the good health properties of fish meat, such as low fat and high protein, it has become a growing direction for people's meat consumption, and the conflict between supply and demand for aquatic products will become more and more prominent, and we are firmly optimistic about the development prospects of aquatic products. Pharmaceutical revenue has increased dramatically: The company achieved pharmaceutical revenue of 48.64 million yuan, an increase of 54% over the previous year, exceeding market expectations, but since it is a trade-based business, the gross margin is very low, and it is not actually profitable; the company has already sold pharmaceutical companies, and we expect that the pharmaceutical trade business will also be divested in the future under the company's strategy of focusing on the main business. Liquor revenue fell by 18%, which is still the focus of the company's development: due to the worsening competition situation in the liquor industry and the suppression of the three industrial consumption policies, the entire liquor industry is expected to continue to be severe this year and next two years; the main prices of the company's liquor products are in the middle and lower end, and are less affected by the three gong consumption policies, or will be ahead of the industry's recovery. Compared to the company's aquaculture industry, the liquor industry has a much higher gross margin and strong profitability. We believe that the company will still keep a close grip on the liquor business and get through the industry slump; in fact, the company has been building a dealer team in the first half of the year, and the company's liquor has a good reputation and high market share in the local regional market, so it will definitely expand its market space to the surrounding area of Changde City in the future. We have a different view from the market: selling commercial real estate is a turning point in the company's strategic transformation, focusing on the implementation of the main business strategy, opening up space for the company's rapid development: the company established two main businesses, fishery products and liquor, and after divesting commercial real estate, the main focus was on aquatic products and liquor management; in particular, the company already has a huge advantage in aquatic resources; the next step is to use its advantages as a brand, channel, and performance. We believe that after having capital, the company has the conditions to achieve rapid performance, and can use the capital to acquire small-scale fishery advantage enterprises and introduce their business experience and profit model; the company's application for additional issuance was withdrawn last year, which does not rule out the possibility of large-scale mergers and acquisitions within the industry in the future. If this were the case, the company's performance could explode. The value of resources is reflected: the commercial real estate of Hongxin Plaza in Shanghai sold by the company was actually distributed to less than 13 million yuan in the company's net assets, and the final profit was 257 million yuan. The huge increase in real estate allows us to see the value-added potential of such assets. Considering that the company has more than 1.8 million mu of aquaculture rights, the scarcity of these resources is gradually highlighted, and there is no limit to the room for future appreciation. Revitalize assets, improve asset structure, improve asset efficiency, and operate more flexibly. The company's capital was tight in previous years, and the sale of assets in exchange for more than 200 million yuan of cash flow provided a relaxed financial environment for the company's operations, and its net assets increased by 36%. At the same time, the balance ratio dropped by 3 percentage points; listed companies already have successful examples of “sale and leaseback” to revitalize assets, and the company can also operate capital on aquaculture rights in some aquatic areas. This flexible management has opened up huge room for imagination for the company. Profit forecasts and ratings Based on careful considerations, we expect the company's 2013-2015 EPS to be 0.53, 0.04, and 0.06 yuan, maintaining the company's increase rating (if we expect mergers and acquisitions in the industry, performance may explode, and the company will definitely show performance that exceeds expectations, and EPS may reach 0.53, 0.10, and 0.20 yuan in 2013-2015). We have a different view from the market about natural disaster risk and food safety risk.