I. Overview of events

The company released its semi-annual report for 2017. during the reporting period, the company achieved operating income of 870 million yuan, down 14.72% from the same period last year, and net profit of 39 million yuan after deducting non-return, an increase of 13.21% over the same period last year.

II. Analysis and judgment

Although income has declined slightly, profits still maintain double-digit growth.

During the reporting period, the company's operating income reached 870 million yuan, down 14.72% from the same period last year. In terms of business, the main agricultural income was 706 million yuan, down 14.89% from the same period last year; industrial income was 94 million yuan, down 17.52% from the same period last year; and trade income was 89 million yuan, up 30.78% from the same period last year. The decline in income was mainly due to the continued volatility and decline in the price of potato, the main crop, during the reporting period, which hit a new low in nearly three years. The sales expenses were 29 million yuan, an increase of 11 million yuan over the previous year, mainly due to the increase in freight charges and the company's industrial integration. With the excellent management and control of the beneficiary group and the continuous improvement of the planting concentration of major crops, the company's operating costs decreased by 22.29% compared with the same period last year, and the net profit after deducting non-return reached 39 million yuan, an increase of 13.21% over the same period last year.

The business model has changed to the self-supporting mode, and the scale advantage gradually shows that the company is rich in land resources, with a land area of 3.42 million mu, including 475100 mu of arable land, which is the only agricultural listed company with a large land resource reserve in the country. The company has gradually shifted from land leasing to independent management, and expanded the scale of independent planting. On the one hand, the self-management model is convenient to control the varieties of crops, on the other hand, with the expansion of planting scale and the gradual increase in the proportion of mechanized operations, the cost advantage of the company's agricultural scale will gradually appear. During the reporting period, gross profit margin rose 3.23 percentage points from 2016 to 26.13%, the highest level since listing.

Backed by Gansu Land Reclamation Group, the industrial chain is expected to be further improved.

(1) the company is the only agricultural land resources listing platform under Gansu Land Reclamation Group, which has a large number of high-quality agricultural assets, including 810 mu of property rights land (more than half of which have not yet been injected into listed companies). (2) the company vigorously promotes the brand construction of "Yasheng good Food" and further improves the company's industrial chain. At present, dozens of good Food series terminal products have been developed, and O2O online and offline joint marketing has been gradually realized with the help of Internet operation mode. The company's terminal food products are expected to become another profit growth point of the company.

Third, profit forecast and investment suggestions

The company owns a large number of property rights land, and the company's profitability is expected to continue to enhance through the continuous integration of land in the future.

It is estimated that the company's EPS from 2017 to 2019 will be 0.12,0.18,0.21 yuan respectively, corresponding to 36.5,25.4 and 21.8times PE. The reasonable valuation range for the next 12 months will be 5.26.2yuan, with a "cautious recommendation" rating.

Fourth, risk tips:

Natural disasters, potato, alfalfa prices continue to fall, agricultural mechanization hindered.