Investment points: A rapidly growing company in the domestic precision aluminum alloy die-casting industry, the company belongs to the precision aluminum alloy die-casting industry, and its main products are used in automobile engines, transmissions and chassis. The main customers include Ford Motor Company, Dongfeng Honda Motor, Dongfeng Honda Engine, Changfuma, and Cummins. The company's recently developed customers include BMW Brilliance, Chrysler, Dongfeng Nissan, etc., which are first-level suppliers to these manufacturers and are exclusive suppliers of various series of products. The growth rate of demand for automotive aluminum alloy die castings is optimistic. Aluminum alloy and magnesium alloy castings are replacing steel castings. It is a trend in the development of the automotive industry. In 1981, the average amount of aluminum used per car in the world was 60 kg, in 1993 it was 85 kg, and now it is around 150 kg; while the current average amount of aluminum used per car in China is 75 kg, there is still a lot of room for growth in the amount of aluminum used in a single car. After explosive growth in 2009 and 10, China's automobile production will grow steadily, based on lower per capita ownership and an increase in per capita GDP. Based on the above two points, the growth rate of demand for automotive aluminum alloy die castings is optimistic, and it is estimated that the domestic demand for automotive aluminum alloy die castings will grow by 15% to 20% within the next three years. Automotive aluminum alloy precision die castings are in a high-end position in the aluminum die casting industry. Automotive die castings have complex shapes and high material properties and accuracy requirements, so processing is difficult; automobile products all have very high safety requirements, so the quality and stability requirements of automobile die casting products are far higher than the general aluminum die casting industry. Furthermore, automakers have strict qualification certification and assessment of their parts suppliers. After certification, partnerships are usually stable, so they have stable orders. The “raw material+cost” pricing mechanism ensures stable gross margin The aluminum die-casting industry generally adopts a “raw material+cost” pricing mechanism, and regularly adjusts prices according to price changes of raw materials (aluminum ingots, aluminum water). The company is currently gradually using aluminum water to replace aluminum ingots to reduce costs. Aluminum ingots now account for about 30% of the total cost, and 70% of aluminum ingots will be replaced with aluminum water in the future, thereby reducing costs. Fund-raising projects enhance profitability The company's fund-raising projects are mainly automobile precision die-casting parts expansion construction projects and light alloy precision molding engineering center construction projects. Project 1 has a total investment of 206 million yuan. The purpose is to expand die-casting production capacity. The company's current production capacity is about 6,000 tons/year, and the fund-raising project has reached an additional production capacity of 6,000 tons/year after delivery; project 2 aims to improve R&D capacity and strengthen product competitiveness. After the fund-raising project was delivered, the company's total production capacity was 12,000 tons. Compared with the domestic market capacity of 1.28 million tons, its market share is still small, and there is plenty of room for future expansion. Profit forecasting and reasonable valuation. According to the progress of the company's fund-raising projects, we expect the company to achieve sales revenue of 380, 522 and 748 million yuan respectively in 10 to 12 years, an increase of 28.4%, 37.2% and 43.4% over the previous year; net profit of 42, 63 and 92 million yuan, respectively, can be realized, equivalent to earnings of 0.47, 0.70 and 1.03 million yuan per share after dilution. Referring to the valuation of the auto parts industry, we gave a valuation of 28-33 times the PE multiplier for 2011. The corresponding reasonable valuation range was 19.60 to 23.10 yuan, and the recommended inquiry range was 17.64-20.79 yuan. According to the new inquiry system, it is recommended to list 17.64 yuan 60% and 20.79 yuan 40%.