Report guide The company's PCM/VCM products will develop steadily along with the industry, and will gradually increase investment in fields such as suslike and decoration materials in the future, moving towards a path of transformation and upgrading. Investment points In the future, the company will transform and develop the company's revenue of 538 million yuan and net profit of 2.07 million yuan in the first half of the year. Currently, 95% of its products are used for exterior materials for home appliances (VCM/PCM), and the company's products can also be used for construction materials such as decoration and elevators. In the future, it will increase its differentiated management efforts and gradually enter other business fields. Suslike, building decoration supplies will become the company's new growth point 1. Traditional products develop steadily with the industry. Currently, the company's exterior materials are mainly used for refrigerators and washing machine side panels and panels. It is one of the leading companies in the domestic home appliance panel materials industry. In the future, as the growth rate of the domestic ice washing industry gradually slows down, the company's traditional products will grow steadily with the industry. 2. Suslike expects batch suppliers to start developing and investing in suslike products in 2012 next year. This product has now been sent to Samsung, Siemens and other companies for trial use, mainly replacing stainless steel products in high-end refrigerators and washing machines. The company's products have a high cost performance advantage. It is expected that they may be tested in small batches by the end of the year. The product design capacity is 1500 tons/month, and production capacity is expected to reach 500 tons/month by the first quarter of 2014 at the latest. 3. Building decoration materials will become one of the company's development directions. Company products can also be used to replace decorative products such as wall tiles. The cost advantage is obvious: the unit price of wall tiles is over 100 yuan per square meter, while the price of the company's products is less than 50 yuan. The product production line will be installed in the first half of 2014. After commissioning is completed, batch supply is expected to begin at the end of 2014. Profit forecast and valuation We expect the company's earnings per share in 2013, 2014, and 2015 to be 0.22 yuan, 0.29 yuan, and 0.35 yuan respectively, corresponding to dynamic price-earnings ratios of 40 times, 31 times, and 26 times, respectively. Although the current valuation of the company is relatively high, we believe that the transformation in the next two years can be expected, and there is a high possibility of a reversal in performance, maintaining an investment rating of “increased holdings”.