Core views: 1. The incident company released its 2018 annual report. 2. Our analysis and judgment 1) Affected by impairment in farming and goodwill, the decline in performance in 2018 was significant. In 2018, the company achieved operating income of 2,801 billion yuan, a year-on-year decrease of 8.52%. Among them, feed/pig breeding/raw material trade/animal health contribution revenue was 2.178 billion yuan/348 million yuan/0.8 million yuan/109 million yuan, respectively, a year-on-year increase or decrease of -1.05%/-37.23%/-22.07%/9.34%. The company's net profit was 287 million yuan, a year-on-year decrease of 524.46%, and net profit after deducting non-post-return net profit of 284 million yuan, a year-on-year decrease of -598.76%. The negative value of the company's net profit was mainly due to losses in the farming business and impairment of goodwill measures. Due to low pig prices and the African swine fever ban in 2018, the number of pigs released and the average sales price dropped sharply. The breeding business lost 123 million yuan, a year-on-year decrease of 233.28%; in addition, the company prepared 132 million yuan for impairment of goodwill. The company's consolidated gross margin was 14.75%, down 3.71 pct from the same period last year. The period's expenses accounted for 15.58%, an increase of 0.82 pct over the previous year. Among them, the company's financial expenses increased significantly. 2) Feed sales remained stable, and the product structure was gradually optimized. In 2018, the company sold 7692,000 tons of feed, of which 105,500 tons were domestic sales, which was basically the same as the same period last year. The company's core feed, “Education Insurance Pre-Enrichment”, accounts for 21.81% of the sales volume of high-end pig feed, contributing more than 53.5% of gross profit, and the feed product structure is gradually being optimized. However, the gross margin of feed in 2018 was 11.77%, down 1.25pct from the previous year, mainly due to the widening gap between corn production and demand, the annual purchase price of more than 150 yuan/ton, and the impact of the trade war between China and the US. The average soybean import price rose 4.2% year on year, causing feed costs to rise and affecting the company's feed performance. 3) The release of pigs is growing steadily. The rise in pig prices will reverse performance. In 2018, the company sold a total of 348,600 pigs, an increase of 28.59% over the previous year; including 512,000 breeding pigs, 141,000 piglets, and 157,300 commercial pigs. Affected by African swine fever at the end of 2018, the company's pig breeding sales were quite different from expectations, which had a significant impact on performance. 2019.3.1 China's pig prices began an upward trend. As of 2019.3.22, pig prices were 15.3 yuan/kg, up about 35.2% during the period. Recently, pig prices have been falling steadily due to the low season of consumption during the year and inventory pressure, but short-term fluctuations need not be too entangled; pig prices will experience a trend rise in the middle of the year. In 2019, the company plans to launch 550,000 pigs (including trusteeship business). Combined with the trend rise in pig prices, the company's pig breeding business ushered in a double increase in volume and price. 3. Investment suggests that the company's feed business is growing steadily, and the share of high-end feed is gradually increasing, which is beneficial to performance contributions. In 19-20, China's pig breeding industry faced the phenomenon of continuous removal of production capacity. Pig prices were in an upward channel. Breeding enterprises benefited from price increases, and their performance would turn losses into profits; the multiplier effect was remarkable. The multiplier effect was remarkable, and the company's performance was flexible, and they were optimistic about future growth. We expect the company's EPS in 2019-2021 to be 0.05/0.49/0.39 yuan respectively, and the corresponding PE is 230/21/26 times, covering the first time, and giving it a “recommended” rating. 4. Risks indicate the risk of raw material price fluctuations, pig price fluctuations, epidemic risks, policy risks, etc.