This report is read as follows:

At present, when the duck industry is booming, the company, as the "duck king of the world", will fully benefit from the prosperity of the industry. At the same time, with the deepening of the reform of the company's state-owned enterprises and the improvement of the company's efficiency into the fast lane, the current layout of Hua Ying was at that time.

Main points of investment:

We believe that the duck chain boom has fully recovered, duck seedling, frozen duck, duck down business will drive the company's performance growth in 2018. With the deepening of the reform of state-owned enterprises, the improvement of internal governance will significantly improve the operational efficiency of the company and open up the flexibility of medium-and long-term performance. We maintain the estimated EPS of 0.38,0.53 and 0.60 yuan for 18-20 years, maintain the target price of 10.13 yuan, and maintain the "overweight" rating. In the first half of 2018, the price of the company's main products rebounded sharply, the company's revenue increased by 54.81% to 2.553 billion yuan, the company's net profit increased by 214.72% to 53.0833 million yuan, and the non-net profit increased by 146.86% to 22.9343 million yuan.

We judge that due to the impact of the increase in the price of environmental protection and related alternatives, as well as the withdrawal of production capacity due to industry losses after 2011, duck prices have entered a period of rebound, which will continue until at least 2019, leading to explosive profit growth per feather. At the same time, duck feathers are another important aspect of the company's performance. Due to shrinking duck production and rising prices such as cotton substitutes, down prices have also risen. At the same time, with the increase in the slaughtering capacity of the company's meat ducks, the company is expected to produce 8300 and 11100 tons of raw wool in 18-19, and the duck feather business alone is expected to contribute 100% + growth.

The reform of the company's state-owned enterprises has been continuously deepened, and the operating efficiency has been significantly improved, opening up the flexibility of future performance. Internally, the company adopts a flexible management system, relaxes the recruitment restrictions on subsidiaries and introduces more social talents; the incentive mechanism has also been reformed to cash in rewards and punishments through the implementation of margin system and excess reward system to enhance the enthusiasm of employees. Externally, the company will strengthen the management and control of dealers, adopt the dealer shareholding system, mobilize the enthusiasm of dealers, and the improvement of efficiency will open up the flexibility of medium-and long-term performance.

Risk hint: the risk of epidemic disease and the rise in duck prices are not up to expectations.