Competition in the industry is intensifying, and the company's profit is not strong. Baoguang Group, the majority shareholder of Baoguang Co., Ltd. was originally an enterprise controlled by the Baoji State Assets Administration Commission. In 2009, 92% of Baoguang Group's shares held by the Baoji State Assets Administration Commission were transferred to Xidian Group free of charge, and Xidian Group became a state-owned enterprise. The main products of Baoguang Co., Ltd. are medium and high vacuum arc extinguishing chambers, switch cabinets, and circuit breakers. Among them, vacuum arc extinguishing chamber products account for about 75% of total revenue. Vacuum arc extinguishers are the core components of medium and high voltage switches, mainly used in the field of power distribution. The company's market share in the field of vacuum arc extinguishers is about 25%, ranking first. With the steady increase in power grid investment in recent years, the company's revenue has also shown an average annual increase of about 20%. However, the company's gross margin showed a downward trend year by year, from 35% in 2000 to 30% in 2005, and then to 24% in 2008. The main reason is increased market competition and a sharp drop in vacuum chamber prices, resulting in a decrease in product profitability. This is also the main reason why the company's revenue and profit have not increased in recent years. In 2008, revenue was 453 million yuan, up 21.2% year on year, net profit decreased 13.8% year on year. In the middle of 09, revenue fell 9.1%, and net profit fell 64.3%. Currently, the vacuum chamber industry is a technologically mature and competitive industry, so it is unlikely that companies will rely on this product to achieve rapid growth in the future. Expectations analysis of Xidian Group's backdoor listing or integration of Baoguang shares. The actual controller of Baoguang Co., Ltd. is China Xidian Group, the only central enterprise in China's power transmission and distribution industry. The revenue for 2007 and 2008 was 10.5 billion yuan and 13.4 billion yuan, respectively, and net profit was 760 million yuan and 990 million yuan respectively. Xidian Group's transformers, switches, and DC businesses are comparable to those of listed companies Tefan, Tianwei, Pinggao, and Xu Ji, and have strong overall strength (Attached Figure 1, Schedule 1). Currently, Xidian Group's main transmission and distribution assets are in Xidian Electric Co., Ltd., its holding subsidiary. Currently, Xidian's listing process is progressing smoothly. With the current IPO restart, it is very unlikely that Xidian Group will go public behind the scenes. Another approach is integration. Looking at the short to medium term, Baoguang's merger into Xidian has enabled Xidian's business to expand further into the medium and low voltage sector. The most likely method is for Baoguang Group to integrate as a platform for Xidian's medium and low voltage business, while Xidian's major businesses, such as high voltage and UHV, which have the strongest profitability, will go public through an IPO, so it is unlikely to inject Baoguang into Baoguang. Xidian Group's overlapping business with Baoguang Co., Ltd. had revenue of 140 million yuan in 2008, and its profitability was comparable to that of Baoguang Co., Ltd. We believe that due to the industry's own factors, the profitability of Baoguang and Xidian is average in this business field, so it is difficult for Baoguang Co., Ltd. to rapidly improve its performance in the short term through integration. Earnings forecasts and ratings. Without considering backstage or asset injection, we expect that the next three years of performance will still grow slowly. From 2009 to 2011, the EPS was 0.05, 0.06, and 0.07 yuan. The current stock price reflects expectations for Xidian in advance, and this kind of expectation is highly uncertain. We gave the company a neutral rating.