Investment highlights Huaying Agriculture's 2017 revenue was 4.122 billion yuan (+64%), net profit of the mother was 61 million yuan (-33%), net profit after deducting net profit of 46 million yuan (+15%); 17Q4 single-quarter revenue was 1,233 billion yuan (+68%), net profit of the mother was 512 million yuan (+68%), net profit of the mother of 12 million yuan (reversal of losses over the previous year). Pay 0.5 yuan for every 10 shares. The table also drove a sharp increase in revenue, and the initial consolidated performance was under pressure. In 2017, the company successively completed more than 10 mergers, acquisitions, investment and financing projects, including HQ Xintang Feudong, Xincai Huaying, Chengdu Fengfeng, and Shandong Zezhong, with significant growth in volume. Among them, the production of down products was 16,900 tons, contributing 1,397 million yuan in revenue, which was the main source of revenue growth. The down and feather sector contributed about 43 million yuan in net profit. In terms of main business, the first half of the year was hit hard by bird flu. The average price of duck seedlings was only 1.36 yuan/feather. The company's integrated business model put a lot of pressure on performance. The industry bottomed out and rebounded in the second half of the year. The average price of duck seedlings was 3.19 yuan/feather, and 130 million duck seedlings were released throughout the year, with an estimated slight profit. Due to the overall downturn in the industry and the fact that the businesses of various subsidiaries still need to be sorted out in the early stages of integration, the rest of the sectors are basically break-even. Additionally, a government subsidy of $15 million is included in current profit and loss. There are many things to look out for in capital management. In December 2017, the company signed a cooperation agreement with Weifang Legang Food Co., Ltd. to acquire or participate in some assets related to the Legang Food and duck industry. This move is expected to strengthen the company's voice on the downstream food side. In February 2018, the company announced that the total capital raised by the non-public offering of shares was not more than 600 million yuan, for a three-dimensional ecological breeding project for 22.86 million commercial ducks and an annual processing of 30,000 tons of feather processing projects. The company plans to complete no less than 6 joint venture cooperation projects in 18 years, including no less than 1 refinancing project, and the annual industrial fund financing scale is over 700 million yuan. The prosperity of the duck sector has improved, and the company's performance is extremely flexible. In the first half of 2017, the industry suffered extensive losses, production capacity was deeply removed, bottoming out and rebounded in the second half of the year, and the price of duck seedlings improved dramatically. The average price of 2018Q1 duck seedlings is 2.45 yuan/feather (+38%). The industry is expected to rise overall in 2018. The company plans to release 186 million bird seedlings in 2018, and the performance elasticity is huge. Investment advice: The company is the only A-share company with meat ducks. The level of prosperity in the industry is expected to increase in 2018. The company's performance is extremely flexible, and at the same time, it can also be expected in terms of capital operation. We are optimistic about the company's future development. Considering the expansion of the company's size, we adjusted the company's net profit for 2018-2020 to 1.03, 1.38, and 166 million yuan respectively. Based on the closing price on April 17, 2018, the corresponding PE was: 38.6, 28.8, and 23.8 times, respectively, maintaining the “prudent increase in holdings” rating. Risk warning: sharp price fluctuations, epidemic risk, environmental pressure exceeding expectations;