1. Incidents Minfa Aluminum released three quarterly reports on October 21. In January-September, the company achieved operating income of 496 million yuan, up 17.32% year on year; net profit attributable to shareholders of listed companies was 39.61 million yuan, up 21.03% year on year, of which 19.54 million yuan was in the third quarter. Earnings per share for the reporting period were $0.26. The gross margin of the company's main business in the third quarter was 13.7%, up 1.7 percentage points from the second quarter. 2. Our analysis and judgment (1) Sales volume increased steadily, and fund-raising projects progressed smoothly. The increase in the company's product sales volume in the first three quarters was mainly due to the year-on-year increase in production capacity. There is a certain degree of seasonality for aluminum profiles used in construction. Generally, May-August is the off-season. The company's orders have been saturated in recent years, and the difference between off-peak seasons is not obvious. However, due to the increase in production capacity, it is expected that the upcoming peak season will fully absorb the additional production capacity. The increase in the company's future performance mainly comes from the 40,000-ton aluminum profile fund-raising project. At present, production capacity of more than 10,000 tons has been put into operation, of which 7,000 tons have basically reached production. It is estimated that all 40,000 ton projects will be completed by the end of 2013, and the company's production capacity will reach about 70,000 tons at that time. In 2010, the company sold about 30,000 tons of aluminum profiles, and is expected to sell 38,000 tons in 2011. (2) Processing fee level Aluminum profiles for construction produced by leading companies in the industry have high brand awareness in the regional market, so the processing fee level is also significantly higher than the industry average. The level of processing fees in the industry is generally between 3,000 yuan/ton (unbranded manufacturers) and 4,000 yuan/ton (branded manufacturers). However, the company's processing fees are basically above 5,000 yuan/ton, which is at a high level within the industry. (3) Product structure optimization helps future development companies now focus on developing industrial materials. The difference in production technology between industrial materials and construction materials is mainly reflected in the higher accuracy requirements of industrial materials for products, and the yield is lower than that of construction materials, so the profit margin of industrial materials is higher than that of construction materials. Judging from the company's recent equipment procurement plan, the product structure will be optimized by continuously increasing the proportion of industrial materials in the future, thereby improving overall profitability. 3. Investment recommendations We expect the company's EPS for 11-13 to be 0.41 yuan, 0.57 yuan, and 0.72 yuan, respectively. The PE corresponding to the current stock price is 30.6 times, 22.2 times, and 17.5 times. Taking into account the company's brand advantages and industry position in the regional market, it maintains a carefully recommended investment rating. 4. The risk suggests that the price of aluminum ingots fluctuates greatly. Demand in the downstream real estate sector is slowing.