1H17 results in line with expectations

Shanghai Maling announced its 1H17 results: revenue+85.1% YoY to Rmb12.18bn and net profit attributable toshareholders +37.4% YoY to Rmb279mn or Rmb0.3/share. 2Qrevenue/net profit attributable to shareholders grew95.3%/25.7%. The company will provide a cash dividend ofRmb0.90 （including tax） for every ten shares.

Trends to watch

Silver Fern Farms performed well in 1H17 recordingrevenue/net profit of Rmb6.61bn/160mn; in 2Q, these werea respective Rmb3.8bn/110mn, better than expected.

Guanshengyuan, Lianhao and canned food businesssaw decent growth.

Decline of breeding business is controllable,mid/downstream business saw significantlyimproved profits. As the company is engaged in fullindustrial chain operation, fluctuations in profit can be offsetamid a hog price downturn; the overall profit won’t declinenotably compared with 2016.

Earnings forecast

We raise our 2017 EPS forecast by 5% from Rmb0.47 toRmb0.50, and lower that of 2018e by 13% fromRmb0.60 to Rmb0.52.

Valuation and recommendation

The stock is trading at 20x/19x 2017/18e P/E. We maintainour BUY rating and Rmb12.22 target price, implying23.43% upside room from the current price.

Risks

Changes in regulatory policy; fluctuations in raw material prices.