I. Overview of events

The company released its semi-annual report for 2017, with operating income of 143 million yuan in the first half of the year, an increase of 5.60% over the same period last year, and net profit of 194 million yuan, deducting non-return net profit of-141 million yuan. Realize basic earnings per share of 0.37 yuan.

II. Analysis and judgment

London Vanguard led to revenue growth, with gross profit falling 5.24 percent. In the first half of the year, the company achieved operating income of 143 million yuan, an increase of 5.60 percent over the same period last year, and its net profit was 194 million yuan, an increase of 297 million over the same period last year. The overall gross profit margin fell 5.24 percentage points to 4.23 per cent as the cost of the seed business and food business increased more than revenue growth. In the second quarter, the operating income reached 52.2056 million yuan, an increase of 45.40% over the same period last year, and the net profit of returning home decreased by 79.7122 million yuan over the same period last year. The company's operating income increased by 7.5694 million yuan in the first half of the year, mainly from the seed business. During the reporting period, the operating income of the seed business increased by 27.5512 million yuan, an increase of 67.81% over the same period last year. Of this total, revenue from Dunzai Pioneer increased by 29.6649 million yuan, while revenue from the cotton business and food business decreased by 46.42% and 14.94% compared with the same period last year.

During the period, the expense rate was well controlled, and the sales net interest rate reached 116.41%. During the first half of the year, the sales expense rate was 29.73%, down 1.05% from the same period last year; and the management expense rate was 49.03%. Benefiting from the effective control of management expenses in the same period, the financial expense rate decreased by 8.43 percentage points, and the financial expense rate decreased by 16.10%, a small increase of 0.65 percentage points over the same period last year. As a result of the sale of 30.5 million shares of Donghai securities held by the company during the reporting period, the net profit was increased, and the net profit rate of sales was 116.41%, a significant improvement compared with-101.75% in the same period last year.

New corn varieties have been approved, and the new products are expected to promote the performance recovery company to devote itself to the cultivation of new corn varieties. A total of 46 new corn varieties were declared and promoted in 2016. Dunyu 328 and Dunyu 15 were approved by the state in June this year.

The company takes independent research and development of new varieties as a solid foundation for long-term development, through the continuous upgrading of high-quality seed products, superimposed corn market gradually warms up, with the high quality of new products to promote sales, and gradually increase market share, promote performance recovery.

Third, profit forecast and investment suggestions

The company is the first batch of integrated seed enterprises in China, and the gradual recovery of the industry and the release of new products will lead to the recovery of the company's performance. It is estimated that the EPS of the company from 2017 to 2019 is 0.51,0.12,0.16 yuan respectively, corresponding to the PE of 17.5,71.9,55.8times. The reasonable valuation range for the next 12 months is 9.510.2 yuan, which is given a "cautious recommendation" rating.

Fourth, risk tips:

The weather changes, the market picks up less than expected, and sales fall short of expectations.