Key elements of the report: Wenzhou Hongfeng (300283) is listed on the GEM market. The capital raised was invested in an automated production line for layered composite electrical contact functional composites and components with an annual output of 550 tons and an annual output of 105 tons of granular and fiber-reinforced electrical contact functional composites and components, with a total investment of 299.09 million yuan. In 2010, the company's total industrial output value and other comprehensive indicators ranked in the top three in the industry. Key investment points: leading electric contact composite functional materials company. The company is mainly engaged in electrical contact functional composites. It has three leading products: granular and fiber-reinforced, layered composite electrical contact functional composites, and integrated electrical contact components. The total production capacity in 2010 was 825 tons, and the company's total industrial output value, sales revenue, total profit, and sales profit rank in the top three similar products in the electrical alloy industry. Industry demand is growing steadily, and concentration needs to be increased. Electrical contact functional composites are mainly used in the industrial low-voltage electrical appliance industry, and the beneficiary investment growth of the low-voltage electrical industry will maintain a growth rate of more than 15%. Electrical contact functional composites will gradually be extended to the fields of household appliances and automobiles in the future, and industry concentration will gradually increase. Analysis of the company's operations. Affected by factors such as rising raw material prices, downstream demand, and new product development, etc., the company's performance has steadily increased; independent innovation has kept the company's profit stable; the company's regional and customer advantages are remarkable; the company's regional and customer advantages are remarkable; in recent years, Zhengtai Electric has accounted for more than 50% of revenue; in response to the high share of silver raw material costs, four different pricing models have been adopted according to customer types. Analysis of fund-raising projects: The company has now publicly issued 17.71 million shares, and the capital raised has been used to expand the production capacity of the three major products, with a total investment of 29.09 million yuan. After the implementation of the project, the company's total production capacity will increase by 50%; after the implementation of the project, the production capacity of layered composite and integrated products is expected to gradually be digested. Profit forecast and company valuation: Predict that the company's earnings per share for 2011 and 2012 will be 1.15 yuan and 1.45 yuan respectively. It is recommended that the company be given a price-earnings ratio of 12-16 times that of 2011, corresponding to a reasonable value range of 17.44-23.25 yuan. Risk warning: The economic downturn exceeds expectations; raw material prices fluctuate greatly; high customer concentration and anticipated sales risks after the fundraising project reaches production.