During the reporting period in 2012, the company realized operating income of 202.9524 million yuan and net profit of 42.5135 million yuan, a substantial increase of 54.52% over the previous year, and earnings per share of 0.12 yuan. the main reason for the increase in performance is that Huaguan Electronics, a subsidiary, has turned losses into profits; the company disposed of idle fixed assets (real estate) and realized income of 6.16 million yuan. After the company stopped the investment securities investment business and transferred the continuous loss-making shares of Lihe Technology and Shenzhen Lihe Digital Television Co., Ltd., the investment loss was greatly reduced.

At the same time, the company announced the distribution plan, which distributes a cash dividend of 0.4 yuan (including tax) to all shareholders for every 10 shares.

In 2012, the company fully implemented the internal control implementation plan, improved the risk control ability, and strengthened the cost and expense control through serious budget management, financial control and performance appraisal, so as to achieve the effective improvement of profitability. During the reporting period, Zhuhai Water Group, a major shareholder, increased its holdings by 9.58 million shares, while Shenzhen, a major shareholder, held a total of 2.11 million shares.

Lihe shares are investment-controlled enterprises, and their income and profits mainly come from controlling (participating) companies. At present, the company's revenue from electronic equipment manufacturing, electronic device manufacturing, utility services and scientific research services is 43.76 million, 77.01 million, 5625 and 19.57 million respectively.

The expansion of foreign investment has enhanced the future growth potential of the main business: the company's subsidiary Lihe Environmental Protection invested 28.8 million yuan to acquire a 60% stake in China Tinto Baichuan and undertake the construction service business of the second phase of the water purification plant in southern Zhuhai. the company's sewage treatment capacity is expected to be improved in the future. The subsidiary Lihe Huaqing invested 16 million yuan to participate in Lihe Optoelectronics, and the subsidiary Tsinghua Science and Technology Park took a stake in Zhuhai Simai Technology Co., Ltd., increasing the project reserve of the company's venture capital business.

Continuous R & D investment and continuous innovation: during the reporting period, the company increased its R & D efforts, with an annual R & D investment of 9.154 million yuan, an increase of 35.30% over the same period last year. The company's total R & D expenditure accounted for 1.42% of the company's net assets and 4.51% of its operating income. It is mainly the subsidiary Huaguan Capacitor and Huaguan Electronics that have developed high value-added products that adapt to the development trend of the industry and the needs of the market, creating conditions for the growth of the company's main business income and the improvement of profitability.

1. Huaguan Capacitor, a subsidiary of Huaguan Capacitor, has carried out the research and development of solid aluminum electrolytic capacitors and substrate independent medium and high voltage aluminum electrolytic capacitors, completed the investment construction of two test production lines, and overcome the technical problems of reducing the material cost of solid state capacitors. improve the market competitiveness of products, the company will also vigorously strengthen the research and development of conductive polymer solid aluminum electrolytic capacitors The product performance of LHS substrate independent medium and high voltage aluminum electrolytic capacitor meets the design standard and meets the conditions of batch production.

two。 Huaguan Electronics, a subsidiary, independently developed the first domestic lithium battery film-making and winding machine, which fundamentally solved the technical problems through the innovative design of the key components of the product. On this basis, the company has successfully developed new products such as desktop machine, mandrel winding machine, small square automatic winding machine, counterclockwise winding machine, super capacitor winding machine and so on. During the reporting period, the new product realized a sales contract of 28.91 million yuan, which became the main product of the company's electronic equipment manufacturing industry, and successfully exported to Germany's mandrel winding machine and American square winding machine, which realized the precedent of putting into production and operation through video remote debugging after the company's acceptance and delivery. The research and development of this series of products enable Huaguan Electronics to turn losses into profits by adjusting the product structure under the macro situation of the depressed industry.

Reasonable control of period expenses:

In 2012, the company's operating expenses, management expenses and financial expenses were 6.99 million, 43.07 million and 910000 respectively, a year-on-year negative growth of 10%, and the three expenses were well controlled.

Analysis of the company's core competitiveness:

1. Technology and brand advantages:

The company's Tsinghua Science and Technology Park (Zhuhai) is the only remaining science and technology park named "Tsinghua" in China besides the Tsinghua Science and Technology Park General Park. It is a branch of Tsinghua Science and Technology Park in Guangdong. Over the years, a unique investment and technical support system has been gradually formed, and the incubation and investment business has a leading position in Guangdong Province and Zhuhai City.

Huaguan Electronics, a subsidiary, whose main products are electronic components production equipment, is one of the earliest domestic enterprises engaged in the production of related products, has successfully developed 15 kinds of new products, now has 122 patents, and passed the national high-tech enterprise review in 2011. the company has certain technical and brand advantages in the field of electronic equipment manufacturing.

Huaguan Capacitor, a subsidiary of Huaguan Capacitor, is one of the earliest manufacturers in China to mass produce chip aluminum electrolytic capacitors. Its technical level and production and sales volume are in the forefront of its domestic counterparts, and it occupies a leading position in the Pearl River Delta in the field of automotive DVD electronic components. Promoting the coordinated development of Huaguan Electronics and Huaguan Capacitor is conducive to the sharing of resources and complementary advantages, and improve the overall profitability.

2. Franchise

The subsidiary Lihe Environmental Protection has a 30-year franchise of the first and second phases of Zhuhai Jida Water purification Plant and the Southern District Water purification Plant, with a daily sewage treatment capacity of 98000 tons. With its mature and refined operation and management process and capable management team, the company's operating projects are highly competitive, and it is the only enterprise in Zhuhai that has maintained 100% sewage treatment standards in the past decade.

(2) the overall goal of production and operation in 2013

In 2013, the company will continue to consolidate the foundation of the main business as the primary task, increase investment and enhance the core competitiveness in an all-round way. to ensure the steady growth of the proportion of the subsidiary Huaguan Electronics, Huaguan Capacitor, Lihe Environmental Protection and Lihe Environment in the company's consolidated net profit, and strive to achieve a combined operating income of more than 220 million yuan, and the company's profit level to grow synchronously. The company will focus on the following work:

1. Strive to start the Tsinghua Science and Technology Park (Zhuhai) renewal project, expand the high-tech business incubator business platform and strive to win the support of the Zhuhai Municipal Government, start the Tsinghua Science and Technology Park (Zhuhai) renewal project as soon as possible, promote the scientific research service and innovation business of Tsinghua Science and Technology Park to realize the economies of scale and social benefits of Lihe Co., Ltd., and further give full play to the role of Zhuhai and Tsinghua University as a cooperation platform.

2. Promote the coordinated development of Huaguan Electronics and Huaguan Capacitor, and realize the production capacity expansion and profit improvement of Huaguan Science and Technology Industrial Park.

After the adjustment of the business strategy and internal control of Huaguan Electronics and Huaguan Capacitor in 2012, the two companies have the basis for healthy and stable development. The two companies will further strengthen the sharing of resources, strive to improve their core competitiveness, realize the overall capacity expansion and profitability of Huaguan Science and Technology Industrial Park, and successfully build the company's electronics industry base.

3. Realize the expected management goal of Zhongtuo Baichuan as soon as possible, and realize the rapid growth of sewage treatment capacity.

The company's acquisition of the stake in Zhongtuo Baichuan has expanded the growth potential of the company's sewage treatment business. In 2013, we will strive for the completion and operation of Zhongtuo Baichuan Dongying project, and at the same time actively implement new urban sewage treatment projects to expand the benefits of the environmental protection industry.

4. Actively carry out project research and strive to increase project reserves.

Strengthen the fine management of foreign investment, strive to cultivate and expand the company's main venture capital business, enrich the company's profit sources, and strive to achieve the continuous improvement of business performance.

5. To improve the comprehensive management level of the company through the in-depth implementation of the internal control standard scheme.

Profit Forecast and Investment rating

The company's performance growth over the years has a strong stability. The focus of the company in the future lies in the injection of high-quality assets between the major shareholder Water Group and Zhuhai SASAC and the cooperation of Shanshan Holdings at the high-tech level. It is estimated that the company's 2013, 2014 and earnings per share are 0.135 yuan and 0.15 yuan respectively. Corresponding to the current stock price earnings ratio of 65, 59 times, the valuation is still in a relatively high position. However, it is still optimistic about the promotion of the company's high-tech graphite dilute technology, mass production, as well as the expansion of Tsinghua high technology and the future development of lithium battery equipment. Maintain the recommended rating. Maintain the company's share price target of 12 yuan in 2013.

Risk Tips:

The risk of macroeconomic decline, the risk of risk control and management cost of remote projects, the risk of high-tech incubation scale and incubation ability, and the risk of environmental protection.