Company News: Dayilong announced results: In 2011 and 1Q2012, revenue increased 25% and 32% year-on-year to 680 million and 160 million respectively; corresponding net profit increased 11% and 25% to 50 million and 9.28 million yuan respectively; corresponding EPS was 0.27 and 0.05 yuan respectively; the 2011 performance growth rate fell short of expectations, and Q2012 was in line with expectations. Comment: Revenue and gross profit both grew steadily, but losses in participating companies dragged down 2011 results. The company's revenue increased 25% in 2011. Against the backdrop of a 10% increase in raw materials and labor, the overall gross margin improved by 0.4% in 2011, of which the 4Q improvement was 1.5% to 31%, showing product competitiveness. The total of the company's three expenses increased 20% year on year, and the corresponding expenses rate decreased by 0.7%. However, due to the economic situation, an injection molding machine in which the company is a shareholder experienced a significant decline in 2011. Revenue fell 38% to 52 million yuan, and the company's investment income fell from 2.07 million yuan to investment loss of 3.75 million yuan, resulting in a net profit growth rate lower than expected. The development of major customers continues to advance, and the growth prospects are gradually becoming clear. As a result of improving the competitiveness of the company's products, according to the annual report, the company obtained in-depth cooperation opportunities with major customers such as Unification, Nestle, Coca Cola, and Procter & Gamble in 2011. Among them, Pepsi and P&G entered the top five customers for the first time. The procurement of the Cola system was relatively scattered among its OEM bottling plants, and no single enterprise entered the top five customers, but it is estimated that it has become a strategic customer in terms of total sales value. Overall, the continuous development of these major customers is in line with our previous expectations. We look forward to further qualitative changes from steady growth through product/major customer breakthroughs to stronger growth. As mentioned in the previous report, the technology of the company's entire beverage production line is being brought into line with foreign giants such as Crones. The competitive products are in line with the domestic trend of mechanization and lightweighting, and the significant increase in price/service competitiveness has led to breakthroughs for major customers, and the long-term prospects are clear. Judging from the current macro background and major customer structure, the company is currently in a steady growth trend of product/major customer breakthroughs, while stronger growth still requires investors to wait patiently. Profit forecast adjustments: The investment income of participating companies fell short of expectations, and bad debt preparations were recorded more than expected. The company's 2012 EPS forecast was lowered to 0.41 yuan, and for the first time, the EPS forecast of 0.55 yuan for 2013 was given. Investment advice: According to adjusted EPS expectations, the current stock price corresponds to price-earnings ratios of 21x and 15x in 2012 and 13, respectively. The company's products benefit from the multiple trends of mechanization, weight reduction, and import substitution, and there is significant room for long-term growth. The current valuation level is underestimated, and recommendations are maintained, but investors are still advised to actively intervene. Main risks: Market demand falls short of expectations; market or sector valuation levels decline.