Report Summary: A leader in the smelting, processing and trade of domestic molybdenum industry. The company has integrated production capacity of roasting, smelting, molybdenum chemicals, and molybdenum metal deep processing, and also has mining rights and prospecting rights. It owns the molybdenum resource reserves of 38,998 tons in the Shuangshan Molybdenum Copper Polymetallic Mine in Antu County, Jilin Province. With the completion of the mine technology improvement project, production capacity will be extended in the direction of molybdenum ore mining, thereby increasing the company's resource ownership ratio and gradually forming a complete industrial chain. Furthermore, the company's trade in molybdenum products is flexible and steady, which not only maintains a high gross profit margin in transit trade and domestic trade, but also provides strong support for reducing the cost of self-production operations and ensuring production stability and operational flexibility. Core competitive advantages: molybdenum iron production capacity scale advantage+economical technical advantage+flexible and steady trade operation capability. In terms of scale advantages, Xinhualong Molybdenum Industry is one of the top three “ten thousand ton clubs” of ferromolybdenum in China, and its production capacity is second only to Luo Molybdenum shares and surpasses gold and molybdenum shares; as the country's integration into the molybdenum industry increases, the company's molybdenum furnace scale advantage will be further reflected. In terms of technical advantages, the company has summed up a set of advanced domestic process technology in production processes such as molybdenum concentrate roasting, molybdenum iron smelting, and ammonium molybdate processing, etc., forming an economical production model with low raw material requirements, stable product quality, and high thermal energy utilization. In terms of trade advantages, the company's good credit qualifications, ability to expand markets and maintain customers, excellent risk control ability, and ability to accurately determine the price of molybdenum products make its trading business a useful complement to the company's main business. Domestic molybdenum industry: Structural adjustment nurtures new opportunities for development. On the demand side, the excellent physical and chemical characteristics determine the broad application space of molybdenum products, and it is difficult to directly replace them; in the long run, with the upgrading of China's economic structure, the development of deep processing industries such as special steels, molybdenum chemicals, and molybdenum metal products will drive the growth of demand for molybdenum products and the optimization of the structure. On the supply side, China's molybdenum resource reserves and production rank first in the world. In recent years, the country's regulatory policies have made the domestic molybdenum industry integrated and optimized, and the company is expected to expand and strengthen in the tide of industry integration with its scale advantage. Fund-raising projects: Increase ownership of upstream resources, expand downstream high-end deep processing, and create a complete high-end industrial chain advantage. The molybdenum and copper mine technical improvement project in Antu County will increase the molybdenum concentrate production capacity by 3,215 tons/year, increase the company's upstream resource ownership rate, reduce raw material costs, and achieve complete industrial chain advantages; the molybdenum products expansion project will increase the production capacity of high-end molybdenum products by 500 tons/year, optimize the company's product structure, and enhance profitability; the technology center construction project will provide technical support for the deep processing of molybdenum products. The reasonable value range for each share is 8.19 yuan to 10.11 yuan. This is a combination of relative valuations and the results of the DCF method. The price-earnings ratio range calculated by the diluted EPS in 2011 is 22.75 times to 28.08 times. Given that the company's business is highly dependent on the steel industry, we gave a 15% valuation discount. Risk warning: 1) The long-term downturn in major downstream industries such as the steel industry; 2) the risk of raw material price fluctuations; 3) trade business risks caused by large fluctuations in raw material prices, large capital consumption, and exchange rate instability; 4) the financial risks of high balance ratio and high balance of accounts receivable; 5) The investment in fund-raising projects falls short of expectations.