Key investment points: In 2011, the company achieved operating income of 383 million yuan, an increase of 28.9% over the previous year; operating profit - 45.28 million yuan, loss of 4.27 million yuan in the same period last year; net profit attributable to owners of the parent company - 47.17 million yuan; the same period last year was 8.3 million yuan; basic earnings per share - 0.23 yuan. The third phase of fiberboard production was put into operation, and revenue increased significantly. The company's main business is timber and wood-based panels. In 2011, the company sold 122,400 m3 of timber; 204,700 m3 of medium and high fiber boards, and achieved timber revenue of 89.98 million yuan, which is basically the same as the previous year. Fiberboard achieved revenue of 244 million yuan, an increase of 48.2% over the previous year. It was difficult for the company to operate in 2011. During the reporting period, due to the impact of the province's natural forest ban and harvesting quota policies, the company's annual harvesting target dropped sharply from 43,000 mu per year in previous years to 11,300 mu, which seriously affected the company's survival and development and industrial raw material forest base construction plans. At the same time, the timber harvesting restriction policy has drastically reduced the production of branches and fuelwood in the local area. There is a shortage of raw materials, and the price has also risen from 380 yuan/ton in the past to 500 yuan/ton, making production costs high. Against this background, the company stopped production of the second phase production line and prepared 11.66 million yuan for corresponding fixed asset impairment. The insufficient utilization rate of production capacity and the tight pattern of raw materials caused the company to lose a lot. Future highlights. From a business perspective, the company's fiberboard business has a serious overcapacity, but the third-phase production line has already made a profit with advanced continuous pressing technology, and it is expected that it will gradually improve in the future. The timber harvesting restriction policy will continue in 2012, and the business environment is still unfavorable, but we believe that the overcapacity of fiberboard production is serious. The current logging restrictions will surely accelerate the reshuffle of the industry. The company's business environment is expected to improve substantially after this round of logging restrictions. The company's current ownership of 1.82 million mu of woodland is the biggest point of interest. Forest assets are measured at historical costs. Currently, there is a large amount of added value. With the advancement of forest rights reform and the relaxation of logging restriction policies, the value of forest trees is expected to be revalued. Profit forecasts and investment ratings. The current profit of the company's main business is still poor, so we do not predict the company's profit. Given that the industry environment is expected to improve in the future, and the company's 1.82 million mu of woodland reserves, corresponding to the current market value of less than 1.2 billion dollars, we believe that there is an undervaluation, giving the company a “recommended” investment rating. Risk warning: The harvesting restriction policy has caused a shortage of raw materials, the company's operating rate is insufficient, and costs have risen sharply.