This report is read as follows:

The company's strategic positioning is gradually clear, and the next two years are expected to accelerate the substantive transformation to the development of high-end copper processing materials market, and cautiously increase the rating.

Main points of investment:

For the first time, coverage gives a cautious overweight rating. We estimate that the EPS of the company from 2013 to 2015 is-0.08 Universe 0.07 Plus 0.13 respectively. The growth rate is-588% Universe 183% Universe 101%. Considering that the company is in a period of transition, it will be given 109 times PE in 2014, corresponding to a share price of 7.63 yuan and a space of 14%.

Strategic transformation to high-end copper processing materials: necessary and willing. 1) the slow development of the main business forces the company to change its strategy. Since the listing, the development of the company's main business is relatively slow, and the products are mainly in the middle and low end, and the profit level is low, so the company urgently needs to change its management thinking. 2) the management has full will. At present, the management tends to be stable, changing the situation of frequent changes before, and eliminating the discontinuity of business thinking. We judge that the management has a full understanding of the bottleneck of the company's development and has a strong willingness to strategic transformation.

The road of high-end copper processing is gradually put into practice. 1) first stop: acquisition of Guhe Metal. In order to open the high-end market, the company acquired Wuxi Guhe Metal in 2011, inherited the Japanese high-end copper processing technology and management model, and gradually opened up new markets with the help of its high-end channels. 2) the second station: 40,000 tons / year high precision belt put into production. The 40,000 t / a high precision belt project is expected to complement Guhe metal, enrich product categories and realize import substitution. The project is already in the commissioning stage, and trial production is expected to begin in June 2014, when the production capacity of high-end products will increase significantly from the current 21000 tons / year to 61000 tons / year, and the product structure will be further upgraded.

The success of the transformation still needs to be followed up. The company's strategic positioning is gradually clear, and we will continue to follow up on whether further transformation measures and high-end products can lead to faster performance growth.

Catalyst: the measures to enter the high-end market have been further implemented, and breakthroughs have been made in the development of the high-precision belt market.

Risk hint: the production progress of high-precision belt still needs to be tracked; the current gross profit margin is generally low, and the processing fee is uncertain; copper rod production capacity is too large, encroaching on working capital