1. African swine fever has led to a drastic reduction in industry production capacity, and this pig cycle is expected to surpass the historical cycle. In this round of African swine fever, the reduction in production capacity exceeds market expectations. According to data from the Ministry of Agriculture and Rural Affairs, breeding sows in March 2019 fell 1.2% month-on-month and 21% year-on-year. The decline in production capacity in this cycle far exceeds the past, and production capacity is still being removed. Combined with the decline in production efficiency due to the epidemic (increased mortality rate led to a decrease in MSY, and early release led to a drop in average weight), the pork gap in China is expected to reach 10 million tons during this cycle. The rise in pig prices is expected to continue for 2-3 years. The high pig price is expected to break through 25 yuan/kg, and some regions will hit 30 yuan/kg. 2. The division of labor between new and old shareholders is clear, leading the company into a new stage of development. In January 2019, Dacheng Xinnong, the company's former largest shareholder, signed the company's share transfer contract with Bay Area Joint Control, and the company's control was changed; the new controlling shareholder, Bay Area Joint Control, is a wholly-owned subsidiary of Bay Area Finance and has abundant financial strength and industrial resources. The new shareholders are responsible for capital and financial support. The old shareholders carefully carry out R&D and management, and the new and old controlling shareholders will join forces to lead the company's development into a new stage. 3. The era of great development of the company's pig farming has arrived! 1) Adequate pig breeding reserves: The company entered the field of pig breeding through mergers and acquisitions of high-quality pig breeding companies Wuhan Tianzhuang and Fujian Yichun, and then continued to increase investment to further improve the breeding layout. After environmental rehabilitation in the second half of '17, the company's ability to breed sows was reduced to about 20,000, of which the GGP core group remained at around 2,200. Furthermore, with the stabilization of the epidemic in the Northeast region, the Northeast Iron Power Project has introduced pigs one after another. According to the plan, the Northeast Railway Project will add 2,000 GP sows and 14,400 PS sows in the future. 2) Mainly self-breeding and self-raising, supported by trusteeship business: The company's fattening is mainly self-breeding, including Northeast Tieli and Fujian Nanping; in addition, the company's subsidiary Xinquayue (the company directly holds 75% of the shares) launched a full trusteeship business. In 2018, there were four fully managed pig farms (6,113 sows stored in total), and the sales volume of pigs under the full hosting model was 95,800 heads. 3) Financial support for the company can be expected from the new controlling shareholder: The company's balance ratio rose to 63% at the end of 2018. Although it is at a high level compared to listed companies in the same industry, considering the possibility of successive conversion of convertible bonds and the support of new controlling shareholders, it is expected that the company still has the potential to expand. Considering that the company has a relatively sufficient inventory of original pigs and binary sows, and combined with the progress of projects such as Northeast China Railway, we expect the company to release about 55/ 100/ 2 million heads in 2019-2021. 4. Investment advice: We expect the company to achieve revenue of 32.75/44.63/6.969 billion yuan in 2019-2021 and achieve net profit of 1.08/4.92/988 million yuan, corresponding EPS of 0.26/1.17/2.34 yuan/share, respectively. Considering the company's future growth and pig boom cycle, the 2021 PE was given 10-15 times, with a target range of 23.4-35.1 yuan, and a “buy” rating. Risk warning: risk of epidemic; production capacity expansion falling short of expectations; pig prices falling short of expectations; risk of fluctuating raw material prices; risk of impairment of goodwill; broken capital chain