Quarterly results are in line with expectations. In the first quarter of 11, the company achieved operating income of 817 million yuan, an increase of 13.6% over the same period last year and 16.9% month-on-month growth; the net profit (belonging to shareholders of listed companies) was 30.8868 million yuan, an increase of 19.4% over the same period last year, which is in line with our expectations.

The beverage packaging business grew steadily, the increase in operating rate led to an increase in gross profit margin compared with the previous month, and the expense rate returned to the normal level. The increase in sales led to a steady increase in the company's beverage packaging business income; from a month-to-month point of view, the increase in the operating rate of the production line led to a rise in gross profit margin to 21.2% (vsQ416.8%). After the expense rate experienced a warped tail of 10Q4, 11Q1 returned to the normal level; the operating expense rate, management expense rate and financial expense rate were 2.5%, 5.7% and 5.2% (vs10Q43.1%,10.4% and 5.6%), respectively.

Beverage packaging business grows steadily with the downstream, and additional investment projects are determined to lay the foundation for future growth. Beverage packaging products are the main source of income and profit for the company. with the improvement of the urbanization rate and the improvement of residents' living standards, coupled with the expansion of Liangle's investment scale in China, the soft beverage consumption market downstream of the company has been optimistic for a long time. The company raised funds (net about 469 million yuan) to expand the bottle blank line and bottle blowing line to further improve the layout of the beverage packaging market and lay the foundation for long-term development in the future. The company's advantage lies in the relatively perfect industrial layout of major cities across the country, especially in the central and western regions with greater growth potential for soft drink consumption.

The valuation is too high, there is room for imagination in capital operation, and the "overweight" rating is maintained temporarily. We optimistically expect that the company's EPS for 11-12 years will be 0.35 yuan and 0.43 yuan respectively, and the current stock price (13.05 yuan) will reach 37 times and 30 times respectively for 11 years and 12 years PE. Compared with Zijiang, which belongs to the same PET packaging, the valuation is obviously on the high side, which includes the premium of the market to the CVC exit mode and the company's expected integration, and temporarily maintains the "overweight" rating.

Core hypothetical risk: integration expectations change and upstream raw material prices fluctuate significantly.