[investment points]

The difference track is scarce, and the main business continues to grow. The company has been ploughing the buffalo milk industry for more than 20 years and has formed a differentiated competition with the market; at present, it has formed a business matrix with characteristic dairy products as the core, photovoltaic powered dairy industry and information service integration. 22 at the end of the year, the company issued an equity incentive plan, with 121 core backbones bound to its interests, with full internal momentum in the year of recovery. The company spun off the loss-making business and cleared out the unfavorable factors. 23Q1 revenue was + 54% compared with the same period last year, and the main dairy industry continued to grow. In 19-22, compared with the same period last year, + 9%, 25%, and 13%.

Under the rising trend of quantity and price of dairy products, minority milk welcomes the development opportunity, and buffalo milk competition focuses on milk source. The nutritional value of buffalo milk is higher than that of black and white milk. At present, the quantity and price of dairy products in China are both increasing, in terms of volume: the whole category continues to grow, but the per capita consumption is still lower than the global level and the intake level recommended by the Dietary guidelines for Chinese residents, and the sinking market contains huge consumption potential that remains to be exploited; from the price point of view, the promotion of residents' health awareness promotes the high-end of the industry, and the content and function of nutrients have become the direction of competition. As a high-quality minority milk, the bottleneck of buffalo milk industry lies in the shortage of milk source, which is reflected in: low yield per unit area of buffalo, low stock, low commercialization of milk source and restrictions on the introduction of improved breeds, so buffalo milk competition focuses on milk source.

The company's milk source exclusive breakthrough, synergy advantages to widen the moat. Milk source: the company has broken through the embryo breeding technology of overseas improved breeds of dairy buffalo for many years, and currently has the ability to produce embryos on a large scale overseas, and has obtained the import license of China's customs, and the import has entered the final stage of formalities; in the next five years, the company plans to build 100,000 pastures in China to undertake the commercial implementation of embryo breeding, which is supported by the Guangxi provincial government. Synergy advantage: the company is located in a unique location, has accumulated rich brand assets in the long-term development, and will accelerate from the southwest to the whole country under the diversified development of traditional and digital channels.

Photovoltaic opens the second curve, empowering the virtuous cycle of the dairy industry. Under the guidance of the policy of "complementary pasture and light", the company cuts into the photovoltaic track and promotes the photovoltaic EPC project with a large number of pastures and roof resources, which can not only broaden the source of income, but also reduce the company's electricity costs, improve asset operation efficiency, and empower the rapid development of the dairy industry and the group.

[investment advice]

The company ploughs the buffalo milk differential track and forms the misplaced competition in the dairy industry. at present, the buffalo grandmother source breakthrough is achieved by carrying out the Nililafi buffalo embryo breeding work, breaking the bottleneck of the supply side of the industry. With the support of the policy of "Muguang complementarity", the company cut into the photovoltaic track, opened up the second growth pole, reduced costs and increased efficiency for the company, and realized the complementary advantages with the main dairy industry. We estimate that the company will achieve an operating income of 48.92 million yuan in 2023-2025, a net profit of 0.37 billion yuan and an EPS of 0.04 pound 0.10 pound in 2023-2025, respectively. Taking into account the company's profit, we use the PS valuation method, and the corresponding PS for 2023-2025 is 0.54 times that of 1.14max. Combined with the valuation of comparable companies in dairy products and photovoltaic industry, we think that the reasonable valuation of the company is 8.659 billion yuan, that is, giving the company 1.18 times PS, corresponding to the target price of 9.96 yuan within 12 months, covering for the first time and giving a "buy" rating.

[risk Tip]

Demand for buffalo milk is less than expected risk

Risk of change in food safety standards

Buffalo embryo import schedule is not as good as expected risk

The risk of photovoltaic business expansion is less than expected.