Basic conclusions,

Electrical contact material: low-voltage electrical apparatus "heart". The performance of the key components of low-voltage electrical apparatus directly affects the reliability of electrical operation. Low-voltage electrical product designers require that electrical contact materials must have good electrical conductivity and thermal conductivity, fusion welding resistance, electrical wear resistance and other characteristics; at present, electrical contact materials are usually based on silver (Ag), which can be divided into silver and silver alloy electrical contact materials, silver metal oxide electrical contact materials, sintered silver alloy contact materials and so on.

Wenzhou Hongfeng: the electrical contact composite material is in the lead in China. Wenzhou Hongfeng Company ranks among the top three of similar products in the electrical alloy industry in terms of total industrial output value, sales income, total profit and sales profit margin. The company has a production capacity of 50 tons per year for particle and fiber reinforced electrical contact functional composites and components, 380 tons per year for layered composite electrical contact functional composites and components, and 900 tons per year for integrated electrical contact components.

Advanced technology ensures strong competitiveness. The company has obtained a number of silver-saving patented technology, reduce the amount of silver per unit product, greatly reduce costs, but also reduce product prices, and greatly enhance the competitiveness of the company.

The company's three-layer contacts and contact pads have successfully entered the supply system of Sensata, a foreign high-end temperature controller enterprise, breaking the pattern that such contacts and contacts have been exclusively supplied by foreign electrical contact material manufacturers for a long time. The gradual localization of three-layer contacts and contact products has been realized.

The low-voltage electrical appliance industry promotes the rapid development of electrical contact functional composites. Electrical contact functional composites are mainly supplied to the low-voltage electrical appliance industry. China is the world's fastest growing low-voltage electrical appliance market. According to the statistics of the low-voltage electrical appliance branch of China Electrical Appliance Industry Association, the average annual compound growth rate of China's low-voltage electrical appliance market from 2000 to 2008 is more than 15%.

Value Evaluation and Investment suggestions

We expect the company to achieve net profit of 91 million, 109 million and 119 million respectively from 2011 to 2013, and the EPS after dilution is 1.16,1.54 and 1.68 yuan respectively. We selected four non-ferrous metal materials companies for comparison, four 11-year, 12-year average PE26.21 times, PE18.23 times. We still adhere to the view that the valuation center of the non-ferrous metals industry declined in 2012, giving the company 12-15 times PE in 2012, with a reasonable valuation of 18.48-23.1 yuan.

Risk hint

Silver prices fluctuated sharply in a short period of time; excessive concentration of customers