Summary:

The company is a comprehensive agricultural planting enterprise, the main business involves potatoes, hops, fruits and vegetables, and vigorously promote beef cattle, mutton sheep breeding, dairy and water-saving irrigation and other fields. According to 18Q3 data, the company's revenue was 1.41 billion, up 12.12% year-on-year, and the attributable net profit was 57.33 million, a year-on-year growth rate of 1.36%, which is in line with market expectations.

From an industry point of view, the company's rising performance this year is mainly due to higher prices in the potato industry. After 17 years of historically low prices, the potato price premium is significant this year, we expect the industry to reach gold acreage in 19 years, and the company's performance will continue to improve.

The domestic beer industry has entered the stock competition, and high-end consumption will become a key area of price increase in the industry. the current price of per ton of alcohol in China is 3000 yuan, compared with 8000 yuan in the United States, 10000 yuan in Japan, and 4300 yuan in the Asia-Pacific region. Price increase may become a trend, and the company, as the largest hop manufacturer in China, will benefit from the industry boost.

The National Agricultural Sustainable Development Plan (2015-2030) requires that the high-efficiency water-saving area (sprinkler micro-irrigation) will reach 288 million mu by 2020. according to this, it is estimated that the new market of 30 million mu will be reached every year, and the investment cost of sprinkler irrigation is about 1000 yuan / mu. The future market capacity will reach 40 billion yuan, and the company will benefit from the growth of the industry.

Profit forecast: we forecast that the company's EPS from 2018 to 2020 will be 0.04,0.05,0.07 yuan respectively, giving the company an "overweight" rating.

Risk tips: 1) the risk of market change; 2) regulatory risk; 3) the risk of industrial policy change.