Event: recently, we conducted a survey of Jingyi shares and talked with senior executives about the company's current production and operation and future development plans. ? The company is the largest copper precision tube manufacturer in South China. The company is located in one of the largest home appliance production places in South China. The company currently has a production capacity of 30,000 tons / year of copper fine tube, 8000 tons / year of copper tube deep processing and about 30 sets of copper processing equipment / year. It is the largest copper tube processing enterprise in South China. The main customers downstream of the company are air conditioning manufacturers, including Midea Electric Appliances and Gree Air conditioning, which account for about 67% of the company's total sales, and the company is highly dependent on downstream customers.

Financial expenses have been a drag on the company's performance. The company's third-quarter report showed that the company's financial expenses in the first three quarters increased by 99.85% compared with the same period last year, eroding the company's profits.

The main reason is that company sales are generally settled through bills, while raw materials are purchased through cash. Since the beginning of this year, the domestic implementation of strict monetary policy has led to high bank discount interest rates, resulting in a substantial increase in the company's financial expenses, thus dragging down the company's performance growth. We believe that with the relaxation of domestic tightening monetary policy, monetary policy is expected to return to normal next year, and corporate financial expenses will be greatly reduced.

The processing cost of copper precision tube is reduced. The "copper price + agreed processing fee" model adopted by the company is priced, and the processing fee is determined once a year. At present, the copper processing fee has been in a downward trend. The threaded tubes and capillaries in the company's main products are in the range of 6000-9000 yuan / ton. the smooth tube processing fee is reduced to about 5000 yuan / ton, and the connecting pipe processing fee in copper tube deep processing products is about 6000 yuan / ton, which is basically close to the cost. The fierce competition in copper precision tube processing industry is the main reason for the reduction of copper precision tube processing cost.

The growth of copper processing equipment business is high. The company's copper processing equipment business has high growth, with the investment project put into production, the company has 30 sets of copper processing equipment / year production capacity. Although there is currently overcapacity in the copper processing industry, due to the large demand for equipment renewal and new capacity equipment, the company's copper processing equipment products have been in short supply. It is expected that the company's business growth rate will still reach 30% in the next three years. However, due to the relatively small business, the contribution to the company's profits is relatively low.

The trend of "replacing copper with aluminum" is very different, and the impact on the company's performance is not reflected. As for the development trend of "replacing copper with aluminum" in the industry, the company generally believes that due to the implementation of the new energy consumption standard for air conditioners, "replacing copper with aluminum" is still irreplaceable in the field of air conditioning condensers and evaporators, and because the weldability and ductility of aluminum is not as good as copper, therefore, "replacing copper with aluminum" can not be applied on a large scale in a short time.