Zhuye Group is the leading lead-zinc smelting enterprise in the country. It currently has a lead-zinc smelting production capacity of nearly 600,000 tons, ranking first in the country and third in the world. Alloys account for 75% of zinc products. The gross profit of zinc alloy is not necessarily higher than that of refined zinc, because the downstream customers of zinc alloy are basically large steel companies with strong premium ability, and contracts are generally fixed prices. The company's lead-zinc smelting and comprehensive recycling technology leads the country and the world. Every year, it can produce nearly 500 kilograms of gold, 100 tons of silver, 50 tons of indium, more than 1,000 tons of chromium, 350,000 tons of sulfuric acid, and a small amount of bismuth. Processing fees have fallen, and profits from the smelting business are meager. The company's electricity costs are 0.6 yuan/kilowatt hour, zinc smelting costs are 5000-6,000 yuan, and lead smelting costs are around 4,000 yuan. The price of lead and zinc has dropped sharply this year, and processing costs have also entered a downward trend one after another. Apart from the fact that the zinc processing fees of some mining enterprises with long orders can remain above 5,000 yuan/ton, the processing fees deducted by other mines have fallen to the 4000-4,500 yuan/ton range. It is still difficult to change the reality that profits from zinc concentrate are getting thinner, and mining enterprises are very reluctant to sell. This year, the company's concentrates were mainly purchased from domestic mines. Since mines are reluctant to sell, only mining companies are allowed to use point price strategies to squeeze the company's profit margins. Loss in inventory prices and losses in futures seriously affected the company's profits. The company's asset impairment losses in the first three quarters reached 244 million yuan, accounting for 63% of the gross operating profit during the same period. The company's silver futures are short. The rise in silver futures prices in the third quarter led to floating losses arising from hedging futures contracts. The net loss from changes in fair value in the third quarter was 87 million yuan, accounting for 54% of the gross operating profit for the same period. Asset impairment losses and fair value changes in the third quarter accounted for 171% of the gross operating profit for the same period. Currently, the price of lead and zinc is hovering at a low point, and asset impairment losses are expected to improve in the fourth quarter. The company's profitability is heavily dependent on by-product earnings. The company's sulfuric acid production cost is 200-300 yuan, and the price of sulfuric acid has stabilized at around 600 yuan this year, greatly increasing the gross profit of the company's sulfuric acid products. Gold and silver prices have fluctuated at high levels this year, and the precious metals gross margin can remain stable. The company's indium production cost is 2000-3,000 yuan/kg, but the company believes that the price of indium is still low this year, which is still far different from the price of 8,000 yuan/kg in 2007, so it has not been sold. Moreover, indium does not account for much of the company's business, and it does not pay much attention to indium. The target materials produced by the company are the most advanced in China, but compared to foreign countries, they are still at the middle and lower end levels, and can only be used in low-end products such as refrigerators. The annual output is about 10 tons, gross profit is low, and sales revenue is classified as “other products.” The company attaches great importance to trading business. The historical background is that the company wants to expand from a single smelting and processing industry to a service industry, but with the current low price of lead and zinc, it is difficult to make money from this business. Asset injection and raw material acquisition are a long way to go. Currently, Minmetals's position on the company is still unclear. Companies such as Shuikoushan are also long-qualified enterprises, so asset restructuring is not easy to carry out. Furthermore, Minmetals is in the process of going public. If the Hunan Nonferrous Metals Group changes, the listing application materials will need to be revised, so injection will not begin in the near future. The lead and zinc mines in Hunan are mostly small and old mines, and the personnel burden is also quite heavy, so there is basically no acquisition value. The investment rating is overweight. The company's earnings per share for 2011, 2012 and 2013 are expected to be -0.10 yuan, 0.05 and 0.12 yuan respectively, respectively, giving the company a “neutral” rating for the time being.