Excelsior released its report for the third quarter of 2020: the company achieved operating income of 1,431 billion yuan, YoY +2.05%, net profit of 123 million yuan, and YoY +47.73% in the first three quarters. Among them, the company achieved operating income of 513 million yuan, YoY -6.16%, net profit of 54 million yuan, and YoY +21.23% in the third quarter. The company's Q3 business structure continued to be optimized. Revenue from the low gross margin business declined, and high-margin businesses such as substitutes and feed enzyme preparations grew significantly. The company's Q3 gross margin reached 42.78% in a single quarter, a sharp increase of 7.67 percentage points over the previous year and a sharp increase of 8.18% over the previous year. The company's “replacement” business continues to grow rapidly and is expected to become one of the main profit growth points in the future. On July 1, 2020, China's feed manufacturers began a complete ban on resistance. Based on overseas experience, we believe that the potential market space for alternative products exceeds 10 billion yuan. In response to the anti-feed policy, eduolian benefits were laid out ahead of schedule, and existing biological enzyme products, glucose oxidase, complex enzymes, and plant extract products were scattered. The acidifier product triglyceride tributyrate was tested in many batches, and an effective alternative feed additive solution has been formed. Combining the company's marketing channel advantages and brand advantages over many years in the agricultural and animal husbandry field, the company's alternative products have now entered the market cultivation and trial stage. We expect that starting in the second half of this year, the company's domestic “replacement” business will continue to experience significant performance growth. The traditional main business, the feed enzyme preparation business, has benefited from a recovery in downstream demand, and non-feed enzyme preparations have opportunities to replace imports. As domestic pig storage continues to rise, the company's traditional main feed enzyme preparation business benefits from a rebound in downstream feed demand. We expect performance to continue to grow in the next 2 years. The company's non-feed enzyme preparation business is developing rapidly. The food grade biological enzyme preparation project has been completed and put into operation, and other new bioenzyme preparation projects will gradually be put into operation in the future. The company's non-feed enzyme preparation products are expected to gradually achieve some import replacement in the future. Company profit forecast and investment rating: We forecast the company's net profit for 2020 to 2022 to be 185, 2.60 million and 326 million yuan respectively, corresponding to EPS of 0.39, 0.55 and 0.69 yuan, respectively. The current stock price is 35, 25, and 20 times the corresponding P/E value for 2020 to 2022, respectively. Maintain a “Highly Recommended” rating. Risk warning: the release of downstream demand falls short of expectations; the investment of new production capacity falls short of expectations; risk of impairment of goodwill.