Key investment points Traditional business: compound fertilizer boom recovers, profit gradually recovers. Jin Zhengda is a leader in the national compound fertilizer industry. It has the highest sales volume in the country for eight consecutive years, and has strong strength. The compound fertilizer industry as a whole was affected by increased downstream demand in the first half of this year. The national compound fertilizer sales market has fully recovered since mid-March. It is expected to recover definitively in 2018, and industry leaders will benefit greatly. Kim Jeong-dae's traditional compound fertilizer business has bottomed out and is off to a good start. The company's 1Q18 revenue was 6.884 billion yuan, +20.32% year over year, up +48.15% year on year from 1Q16; net profit was 614 million yuan, 18.76% year on year, up 50.86% year on year. Kim Jong-dae continues to develop and innovate, and continues to extend product lines to fields such as soil, water, pharmaceutical+fertilizer, etc., in line with the direction guided by the national industrial policy. New progress has been made in research and development of controlled release fertilizer, foliar fertilizer, liquid fertilizer, water-soluble fertilizer, microbial fertilizer integration, enhancer and biostimulant products. Jinfeng Commune: Trillion-dollar land trillion-dollar market, nurturing agricultural unicorns. China's agriculture has entered a new era of improving quality and efficiency, safe output, and green development. The compound fertilizer industry and even the agricultural materials industry are developing in the direction of the entire industrial chain and comprehensive agricultural services. As a leading enterprise of new compound fertilizer, Kim Jeong-dae has a huge leading edge in technology, talent, capital, channels, and resource integration. By the end of the first quarter of 2018, the number of county-level Jinfeng communes under construction and already under construction had reached 75, serving more than 1 million mu of land, and growing rapidly. The company's development goals for today and next two years are: 150 in 2018 and 300 in 2019, respectively. The asset-light model will ensure the rapid expansion of the business and move forward lightly. In the face of the downturn in the traditional agricultural industry, the transformation is mainly agricultural services. Incidentally, binding agricultural product sales is a viable path to further boost performance. Germany's Kim Jeong-dae: Mergers and acquisitions help Kim Jeong Dae's international layout, break through production capacity difficulties, and expand the high-end market. Kim Jong-dae has built the largest production capacity for slow-release fertilizer and water-soluble fertilizer in the country. He is also exporting capital, technology, and products through mergers and acquisitions. The company's business continues to expand and expand its international layout. Kim Jong-dae used the merger's company to fully develop high-end product R&D and overseas sales to build brand influence. Currently, Kim Jong-dae is already planning to establish four major centers in the Mediterranean, Asia Pacific, Europe, and America to sell its high-end fertilizer products globally, and use the brand influence of German Kangpu and other companies to seize the high-end domestic market occupied by foreign investors in reverse. Kang Pu: Announced the return to specialty fertilizer, Kang Pu China settled in Guizhou. The performance of the acquired companies remained outstanding after merger. As of the end of 2017, Germany's Kang Pu had total assets of 173.4884 million euros, net assets of 13.2294 million euros, liabilities of 16.0259 million euros, and a balance ratio of 92.37% (the above data has not been audited). In June of this year, Kangpu announced its return to the specialty fertilizer market, officially settled Kangpu China in Guizhou, and released a new generation of specialty fertilizer products. It is expected that Kang Pu will help Kim Jeong-dae to strongly expand the high-end fertilizer market at home and abroad, seize the emerging city market, and form a strong brand influence. Risk factors: 1) risk of continued decline in agricultural product prices; 2) risk of price fluctuations of raw materials; 3) policy risk; 4) risk of business promotion falling short of expectations. Profit forecasting, valuation and investment ratings. On June 23, the issuance of shares by the company to purchase agricultural investment companies (a wholly-owned subsidiary agricultural commercial company, which indirectly holds 88.89% of Ningbo Jinzhengda's shares and is engaged in horticultural consumer products and specialty fertilizer business) was unconditionally approved by the Securities Regulatory Commission. After the transaction is completed, the parent company will hold 100% of the shares in the underlying company. We maintain our forecast that the company's net profit attributable to shareholders of the parent company for 2018/2019/2020 was RMB 1,104/15.19/19.80 billion yuan, respectively, and the corresponding EPS was RMB 0.35/0.48/0.63 yuan, respectively. Considering the company's leading premium and the steady expansion of Jinfeng Company, maintain a target price of 11.5 yuan (corresponding to 31 times PE in 18 years) and maintain a “buy” rating.