A pioneer in the industrial design industry, with unique DMS model characteristics, Yichang Co., Ltd. (002420) is an enterprise with the concept of “industrialization of industrial design”. Currently, it is mainly engaged in the design and manufacture of exterior structural components for televisions. In 2009, the company achieved operating income of 1,486 million yuan and net profit of 133 million yuan. It formed a good supply relationship with home appliance giants such as Haier, Konka, and Changhong, with a market share of 6%, ranking first in the country. The average annual net profit growth rate for the first three years reached 30.6%. As an industry leader, the company first implemented the DMS (design, manufacturing, service) business model in China, integrating structural and external design, tool development, manufacturing and service links to provide customers with one-stop solutions. Capture one of the most important links in the home appliance industry chain and strive to upgrade from manufacturer to design outsourcer. Exterior design: a golden link in the home appliance industry chain. With the increasing development and maturity of the home appliance industry, on the one hand, competition among downstream manufacturers is becoming more and more intense, and profit margins are being compressed. In 07-09, the net interest rate of most major appliance companies in China did not exceed 3%; on the other hand, the supply of internal core components of various types of home appliances is becoming increasingly standardized and homogenized. Appearance-oriented product design has gradually become an important factor in winning over consumers in the home appliance industry chain, and has also become one of the most profitable golden links. Currently, outsourcing the supply of exterior and structural parts in the home appliance industry is gradually becoming a trend. By choosing all of these entry points, companies can enjoy a higher rate of development than that of downstream industries. Three-dimensional competitive advantage: excellent design, rapid response, and cost leadership. As an enterprise promoting industrial design, the company has strong strength in exterior design. The company has 294 designers. Its design strength is leading in the industry, and has won design awards including IDEA in the US, Red Dot in Germany, and iF in Germany. Compared with domestic peers, the company's product design response speed advantage is obvious. The average time from concept design to mass production is 55 days, and the speed is 0.6-2 times higher than the industry average, so it can quickly keep up with the production needs of upstream and downstream customers. The company effectively reduces production costs through the advantages of scale and design ability. Compared with domestic competitors, the production cost of similar products can be reduced by more than 10%, and some products can reach 20% or more. Short term: flat screen TVs, in high demand. With the stimulus of national policies such as sending home appliances to the countryside and the decline in the cost of LCD components, the future development expectations of China's flat screen television industry are promising. The China Electronic Chamber of Commerce predicts that China will fully enter the flat screen TV popularization period in 2010, and the sales scale of flat screen TVs will reach 26 million units, an increase of 64% over 2008. Since 73.6% of the company's revenue currently comes from flat screen TVs, and CRT TVs, which account for 11.3% of revenue, are expected to shrink, we believe that the short-term tablet business will be the main driving force for the company's growth, contributing 106%, 95%, and 83% of the overall performance increase in the next three years, respectively (CRT business has negative growth). The estimated 10-year EPS is 0.45 yuan. Following the forecast of the company's production capacity release and sales situation, we expect the company's EPS for the year 10, 11, and 12 to be 0.45, 0.61, and 0.80 yuan, respectively. Corresponding to 10-year EPS 25-30 times, the company's total price is 11.25-13.5 yuan.