Guoyuan Hong Kong published a report saying that benefiting from the rapid development of low-temperature meat products in China and industry trends, there is huge room for growth. It maintains the 12-month target price of HK$8.47 for Shenguan Holdings. The target price is equivalent to 25 times the company's predicted price-earnings ratio for 2010, and the investment rating is buy. The report points out that production capacity investment is in line with expectations. According to Shenguan Holdings' production capacity expansion plan, the company will add 50 new collagen casings production lines in 2010. By the end of June 2010, the company had built and completed 30 production lines and put into use, and the production capacity was well utilized. Costs and expenses remained stable. In order to make full use of the new production capacity, the company maintained its strategy of maintaining product prices unchanged in 2010. Judging from the operating situation in the first half of 2010, the gross margin of the company's products remained stable, and all expenses were kept at a reasonable level. Invest in treasury bonds to improve the efficiency of the use of capital. On July 22, Shenguan Holdings announced that it had purchased one-year Chinese voucher-style treasury bonds with a principal amount of about 110 million yuan, with a coupon interest rate of 2.6%. The company currently has sufficient liquid resources (at the end of 2009, the company held about 1,028 billion yuan in cash and cash equivalents). Compared with interest rates on time deposits offered by domestic commercial banks, purchasing treasury bonds can provide better yields for Shenguan Holdings, and interest income generated from purchasing treasury bonds is exempt from Chinese corporate income tax. Guoyuan believes that the industry in which the company invests in treasury bonds will not affect the normal operation of the company and can improve the efficiency of the company's use of capital. Shenguang Holdings dropped 0.28% yesterday to close at HK$7.19.