Report Summary 1. Feed sector: Volume growth was rapid, and production capacity released 7691,000 tons of feed sales in 2017 (+5.10%), mainly due to the large increase in large-scale strategic customers. As a leader in the education tank material industry, the proportion of education materials and pig breeding feed reached 20% and 24% respectively. In 2017, pig feed increased by 7 pct in total, and the gross margin was significantly higher than the industry. The company's direct sales strategy for major customers is ahead of the industry, with direct sales accounting for 60%. It is expected that the target sales volume of at least 850,000 tons (+10.52%) will be achieved in 2017. Based on a net profit of 100 yuan/ton, the feed sector will contribute about 85 million yuan in net profit. 2. Breeding sector: Large-scale pig farm service providers, the number of equity listings is growing rapidly. We believe that in the future, China's pig farming structure will change from the current pyramid shape to a spindle shape. On the one hand, we need to pay attention to large-scale breeding enterprises; on the other hand, we need to pay attention to feed companies that provide a full range of services for 5000-10,000 farms, such as Jin Xinnong. Jin Xinnong is positioned as a provider of comprehensive solutions for large-scale pig farms. It is entering the downstream farming industry in various forms. Pig breeding farms and million-head ecological breeding project communities have been set up in Tieli and Nanping, respectively, to enjoy downstream farming profits while providing strong impetus to increase feed sales. The company released about 374,800 pigs in 2017, and is expected to have at least 310,000 in 2018, contributing an estimated net profit of 31 million yuan in 2018. 3. Other sectors: Focus on pig industry chain companies revolve around the pig industry chain. Both endogenous growth and industrial investment have entered a healthy growth path. The industrial chain integration strategy has made breakthrough progress, and will position itself as a technology company in the pig industry chain. In 2017, Huayang Pharmaceutical and Yinghua Xunfang contributed 10.94 million and 49.6 million net profits to the company respectively. The profit forecast is based on the company's development potential in the farming and feed business. It is estimated that the company's net profit in 2018/19/20 will be 35.95/40.31/4 091 billion yuan, EPS is 0.26/0.29/0.39, and PE is 33X/30X/22X, giving it a “buy” rating. Risks indicate the sudden outbreak of large-scale uncontrollable outbreaks, major food safety incidents, and breeding technology in multi-storey communities falling short of expectations.