The company firmly extends the upstream and downstream duck industry chains, and is positioned as the “World Duck King” for the next 3-5 years! According to grassroots research, it is expected that the company will focus on developing the duck industry in the future, and the broiler sector is expected to gradually shrink. By expanding the breeding, slaughter, processing, food scale and brand of commercial ducks, it will strive to become the “world duck king” within the next 3-5 years. Looking at the path, first, continue to expand the number of commercial ducks and ducks raised on their own by increasing self-built farms (the company's investment in ongoing construction projects continues to increase, of which 6 million commercial duck farms were added in the first half of the year), while considering mergers and acquisitions of peer resources; second, by shrinking the broiler sector and concentrating on the meat duck business, the efficiency of commercial duck breeding (the company has a production capacity of about 40 million chickens, of which about 30 million birds are slaughtered, and the export volume is about 10 million); third, through the extension of the industrial chain, the company has achieved the value of secondary products of duck products Fully excavate ( Among them, the quality of products such as duck feather and duck blood has gradually been recognized by the market). We expect that in the next 3-5 years, the company is expected to achieve the full industry chain layout of 150 million self-breeding commercial ducks. Since July, meat ducks have risen 50%, and the company's performance is expected to improve significantly in the second half of the year! According to grassroots research, the removal of more than 30% of duck production capacity in the Henan region is due to environmental protection, and the removal is even more severe in the Shandong region. Most of this backward production capacity is small and medium-sized breeding enterprises near water sources built in the early years, so environmental protection is the most sensitive to the removal of duck production capacity (compared to pigs and chickens). The removal of backward production capacity is expected to push the price of duck products to rise beyond expectations. It is estimated that the company will produce 150 million ducks for the full year of '17 (including 60 million in the first half of the year and 90 million in the second half of the year), 80 million meat ducks (31 million in the first half of the year, 50 million in the second half of the year), and export sales volume of 70 million birds (30 million in the first half of the year, 40 million in the second half of the year). It is estimated that the average profit from the slaughter of a single feather in the second half of 2017 is 4-5 yuan (average profit for a single feather from the beginning of July to date), with a profit contribution of 2,250 million yuan, and an average profit balance of exported ducks in the second half of the year (7 million in the second half of the year) Month-to-date profit and loss balance); it is estimated that the company will produce 40 million chickens for the full year of 2017 (including 17 million in the first half of the year, 23 million in the second half of the year), 30 million broiler slaughter (13 million in the first half of the year, 17 million in the second half of the year), and export sales volume of 10 million birds. It is estimated that the average profit from single-wing chicken slaughter in the second half of 2017 is 1.5-2.5 yuan (average profit of 2 yuan for single birds since the beginning of July), profit contribution of 25.5-42.5 million yuan, profit contribution of 25.5-42.5 million yuan, and average export of chicken seedlings in the second half of the year (7) Month-to-date single-wing break-even). Taken together, it is estimated that the company's main business profit for the second half of '17 is 226-293 million yuan. It is estimated that the annual production of duck seedlings is 150 million, meat ducks slaughtered, 30 million chickens, 30 million broilers, 30 million broilers, an average profit of 3-4 yuan, profit contribution of 3-4 million yuan, profit contribution of 3-4 billion yuan, profit contribution of 3-4 billion yuan, average profit balance of exported duck seedlings, average profit of 1-2 yuan, profit contribution of 30 to 60 million yuan. Taken together, the company's main business profit is estimated at 33-46 million yuan in 2018. The company's out-of-body joint ventures have been set up one after another, boosting expectations for state-owned enterprise reform! Recently, the company announced the establishment of Shanghai Huaying and Zhengzhou Huaying. According to grassroots research, the company has been developing duck products in recent years (its new products, duck blood, snacks and other products have received market recognition for their raw material quality), and has now entered the channel layout stage. Both newly established companies focus on R&D, production and sales of duck products, and have promised net profit of 1 million yuan and 2 million yuan respectively for 2018. Furthermore, the company's management's shareholding is constantly being promoted. We believe that the company, as the main target of local state-owned enterprise reform, will fully benefit as the national reform accelerates. Investment advice: We estimate that the company's net profit in 17/18 will be 201/304 million yuan, EPS will be 0.38/0.57 yuan, corresponding PE will be 33 times /22 times, respectively, and the target price will be 18 yuan, giving it a “buy” investment rating. Risk warning: duck meat prices have risen less than expected; state-owned enterprise reform has fallen short of expectations