Zero Seven Co., Ltd. announced today that the company's plan for targeted distribution to the chairman and former second-largest shareholder, Lian Wei Fei, was approved by the shareholders' meeting. We believe that after the smooth progress and successful implementation of this targeted increase, 07 shares will, on the one hand, receive financial support, which is more conducive to the development of the company's existing business; on the other hand, as the company's titanium concentrate underwriting contract progresses, the company's performance will also increase more definitely. The company's current increase in distribution will once again accelerate the company's development. The company's board of directors decided earlier to announce that 07 Co., Ltd. plans to privately issue 50 million shares to Lian Weifei, the chairman of the company and the former second-largest shareholder, to raise 727.5 million yuan in capital through cash subscriptions, all of which will be used to increase the company's own capital and strengthen the company's capital strength to meet the company's financial needs for future business development. After the targeted increase is completed, the total number of shares of the company will increase to 280,9654 million shares, of which Lian Weifei holds 75 million shares, with a shareholding ratio of 26.69%, making him the company's largest shareholder; Borong Investment holds 40.2062 million shares, with a shareholding ratio of 14.31%, making it the company's second largest shareholder. Since the two are acting in concert and together hold 41.00% of the company's total shares, this offering will not result in a change in the company's control. Key investment points: Sales of mineral products are expected to gradually become the company's main source of profit. The original main business of 07 Co., Ltd. was the hotel industry and other related businesses, and this year it gradually involved sales of mineral products, etc. Previously, the hotel business revenue was relatively stable, but it was difficult to bring about a good profit growth trend. In order to improve the company's operating conditions, the company added a titanium ore product underwriting business at the end of 2011, and achieved sales revenue of 33.2363 million yuan and gross profit of 10.651 million yuan in the first half of this year. The company also successfully turned a loss into a profit and gradually became the company's new profit growth point, and is expected to become the main force for the company's profit growth in the future. The company's performance increased significantly in the first three quarters of this year, and future performance growth is expected to be even more significant and rapid. From January to September 2012, the company achieved total revenue of 215 million yuan, an increase of 83.35% over the previous year; achieved net profit attributable to shareholders of listed companies of 10.84 million yuan, an increase of 67 times over the previous year; and achieved diluted EPS of 0.05 yuan. At the same time, the company's 3rd quarterly report shows: ① The increase in revenue and profit was mainly due to the impact of the underwriting business in the initial stages, shipping schedules, and the Malagasy climate, etc.; ③ While doing a good job of underwriting titanium ore imports, the company also developed domestic and foreign trade business for other mineral products, further increasing the company's profit growth points. ② We believe that as the operation of the island business and underwriting business becomes more mature, we expect that the company's contribution revenue and profit from mineral product sales and trade operations, including titanium ore imports, will further increase in the fourth quarter of this year and beyond. Give the company a recommended investment rating. We are based on mainland mining's production plans of 500,000 tons, 800,000 tons, and 2 million tons of titanium ore respectively, and assuming that all of them will be sold on behalf of 2007 shares. Based on the current low titanium concentrate prices, the company's EPS for 2012-2014 was 0.43 yuan, 0.70 yuan, and 1.73 yuan respectively. With the current contract, the company's EPS fluctuated by 0.09 yuan. The performance growth was determined, and based on the good development trend of the mainland mining industry and the possibility that titanium ore prices would rise above expectations. Recommended investment rating. The target price for 6-12 months is 20 yuan. Risk warning: The amount of titanium ore sold on consignment is lower than expected, the price of titanium ore products fluctuates greatly, etc.