Incident: The company resumed trading, and the company to acquire or participate in shares in the target company - Weifang Legang Food Co., Ltd. (hereinafter referred to as “Legang Food”) some assets related to the duck industry. It is planned to acquire or participate in Legang Foods, and its strategic layout will be further expanded. We have three main interpretations of the company announcement: First, the company firmly opens up and focuses on the upstream and downstream of the duck industry chain. Second, the company is actively seeking and constructing domestic and foreign trade channels and opening up market segments. Third, the company has made frequent moves in integrating the duck industry chain in recent years, reflecting the company's management's clear strategy and high execution. 1) 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! 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. Legang Food, which plans to acquire or participate in, currently has a production capacity of 1.35 million duck-related industries, 3 meat duck processing lines, a daily slaughter capacity of 100,000 ducks, and has a feather processing plant, a duck skeleton processing plant, and a feather powder processing plant. It is a step further for the company to accelerate the layout of the entire industry chain, while also improving the production capacity matching of all links in the industry chain, thus improving production capacity utilization and gross margin levels. 2) Strengthen the company's product brand advantages, develop domestic and foreign market segments collaboratively, and open up export channels such as Japan, South Korea, Europe, and the US. The main export markets of Legang food include countries and regions such as the European Union, South Korea, Japan, Singapore, Canada, and Hong Kong. Furthermore, Legang is the only domestic exporter that exports to Canada, and has successfully passed the US government's inspection of farms and processing plants. The company has a channel layout in the domestic market and exports to countries such as Japan and South Korea. The integration of the two contributes to market complementarity and channel collaboration. Furthermore, the military food developed by Legang Food in cooperation with the military has received batch orders for military supplies in recent years, helping to make up for the company's high-end domestic market segment. 3) The company's out-of-body joint ventures have been established one after another, boosting the expectations of state-owned enterprise reform! The company announced the establishment of Shanghai Huaying and Zhengzhou Huaying, and is also developing duck products in recent years (its new products, duck blood, snacks and other products, have received market recognition for their raw material quality). They have now entered the channel layout stage. Both newly established companies focus on the R&D, production, and sales of duck products, and have promised net profit of 1 million yuan and 2 million yuan respectively in 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 for the year 17/18/19 is 122/26/350 million yuan, EPS is 0.23/0.49/0.65 yuan, corresponding PE is 56 times/26 times/20 times, respectively, and the target price is 20 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