Investment highlights: A leading domestic freshwater fish farming company. Dahu Co., Ltd. is mainly engaged in freshwater fish stocking and sales, and is also involved in the wine industry, pharmaceutical trade, food processing, investment, and high-tech development. In 2014, the company's largest business, freshwater fish stocking sales, accounted for 68.6% and 59.9% of revenue and gross profit, respectively. In 2014, the company achieved operating income of 676 million yuan, a compound growth rate of 9.1% in 12-14; net profit of 1,602 million yuan, and a compound growth rate of -55.2% in 12-14. Traditional wholesale channels transform into O2O production and marketing service platforms. The company's freshwater fish stocking business is mainly through wholesale sales, aimed at customers such as wholesalers and enterprise groups. Currently, the average product price is about 7 yuan/kg, which is 70%-80% lower than the price of consumer terminals such as farmers' markets and supermarkets. Channels limit the expression of product value, and the “natural stocking and ecological quality” characteristics of the company's products have not received sufficient market premiums. Therefore, the company plans to build an ecological food O2O production and marketing service platform to achieve sales to consumer terminals. Beginning in '14, the company established Shanghai Yipangyu Ecological Technology Development Co., Ltd., and initially established a model of “regional base temporary care and supply, farmers' market terminal retail, and online platform order and reservation”. Using Shanghai as a pilot market, it gradually promoted the Yangtze River Delta region. Further, the company may set up direct-run stores. Compared with farmers' markets, it can integrate customer interaction experience, product display and “last mile” delivery functions; product categories can gradually be expanded to include quicker semi-finished products such as split fish and fish balls with seasoning packs. It has abundant surface resources and develops diversified derivative industries. The company currently has 1.8 million mu of surface use rights. In addition to freshwater aquaculture, it can explore diversified industries around surface resources in the future. (1) Supply chain finance, fishery trade. The company has formed a freshwater aquaculture industry chain of “fish fry sales - fish flower repurchase - natural stocking - fishing sales”. Among them, there are more than 100,000 fishermen who temporarily raise seedlings by upstream service companies, and the annual operating working capital requirement exceeds 100 million yuan (the production cost of the company's aquatic products in '14 was 363 million yuan, mainly the cost of fry), and the vast majority of fishermen have the problem of limited scale expansion due to tight capital. Based on extensive fishermen's resources, the company may enter the field of supply chain finance in the future. At the same time, the company has a large capacity to temporarily raise freshwater fish. By buying fish farmed by retail investors, temporarily raising it, and then selling it during peak consumption periods, it can obtain a difference in trade prices. (2) Fishery and light integration. The company's water surface is widely distributed in Xinjiang, Hunan, Anhui, and Jiangsu. Developing distributed photovoltaic power generation according to local conditions is a viable solution for the company and local counties and cities to increase revenue. By setting up battery panels on the surface of the water and aquaculture under the surface of the water, the company has increased land utilization and achieved parallel farming and power generation. (3) Others: travel and leisure, environmental protection, etc. The company's aquaculture area is usually surrounded by mountains and water, and the scenery is beautiful. Currently, activities such as fishing have been developed sporadically. In the future, overall planning of lake tourism and leisure activities can be of greater value; the “natural farming” model has created a new model of using biological chains to improve the water environment. Currently, the company has carried out research with some research institutes on the efficacy of natural farming to improve the water environment, and there is no shortage of possibilities for commercial promotion. Give it an “increase in holdings” rating. It is estimated that in 15-17, the company will achieve operating income of 6.93/7.16/740 million yuan, a year-on-year increase of 2.5%/3.3%/3.4%; realized net profit of 1158.9/2282.7/3386 million yuan, a year-on-year increase of 623.6%/97.0%/44.9%; and achieve EPS of 0.02/0.05/0.07 yuan (after dilution of non-public offering). The company's circulation value of 1.8 million mu of water surface is about 16 billion yuan (circulation price is about 9,000 yuan/mu), and the current market value is only 8 billion yuan. The “increase in holdings” rating was given based on the company's broad prospects of developing diversified derivative industries around surface resources in the future.