Key investment points China Financial Investment is one of the leading companies in domestic alternative financing business. The company was founded in 1980, and its business has changed several times in history. Currently, its main business focuses on providing a full range of financing solutions for small and medium-sized enterprises in the Beijing region. The company's customer loan scale reached 900 million yuan in the first half of 2012, accounting for about 4.5% of the national pawnbroking loan scale of 20 billion yuan. The scale is far larger than competitors in the same industry, and it is one of the leading enterprises in domestic alternative financing business. In the context of interest rate marketization, industry opportunities and challenges coexist. At present, market-based interest rate reform has entered a deep-water zone. Considering the risks of the banking system, deposit interest rate reform will be a gradual process, and alternative financial services will still have a strategic opportunity period of at least 3-5 years. Specific opportunities are reflected in the fact that it is difficult for small and medium-sized enterprise groups that create 80% of employment opportunities and 60% of GDP to obtain financing support from the banking system, and the financing needs of small and micro enterprises close to 10 trillion dollars have been squeezed out of the financing needs of small and micro enterprises with limited capital flows to pawnbroking, small loans, etc. The gap between capital supply and demand has boosted loan interest rates for small and micro financial institutions and supported the current boom in pawnbroking, small loans and other industries. Leading enterprises are expected to seize this period of opportunity to achieve rapid development in order to cope with future competition in financial innovation and differentiated management after interest rate marketization. The diversified industrial background and full license service helped the company win customers and gradually establish differentiated advantages. China Financial Investment has accumulated rich experience and resources over the years of engaging in diversified industries. On the one hand, the company can naturally establish deep distribution channels and networks to get close to potential customers and enhance the company's ability to dispose of assets. On the other hand, diversified customer sources also help the company spread risks and avoid potential risks similar to those brought about by the downturn in the real estate industry. At the same time, the company's full license qualification enables it to creatively provide customers with one-stop financing services according to customer conditions, and gradually cultivates differentiated business models such as “special financing services for courtyards”, “financing services for tea market merchants”, and “financing services for merchants in the automobile trading market” in response to the needs of market segments. A complete workforce, prudent processes and risk control design, and diverse funding channels support high growth. The company has a complete front and back office team of more than 100 people and a prudent and efficient risk control review mechanism, which ensures that the company's business failure rate is less than 0.5% in the past three years. At the same time, diversified financing channels such as retained earnings, convertible bonds, and stock financing are expected to support its high growth in the future. risk factors. Risks brought about by continued economic downturn, and human and operational risks brought about by rapid expansion. Earnings forecasts, valuations and ratings. China Financial Investment's alternative finance loan business faces huge financing needs of over 300 billion dollars for SMEs in Beijing. Its long-term, diversified industrial experience and resources, fully licensed one-stop financial services, prudent risk control mechanisms and diversified funding channels will support its rapid growth in the next few years. We forecast that the 2013-2015 EPS will be HK$087/0.114/0.149. Referring to the company's valuation level in Hong Kong and the A share industry, we gave the company 10 times PE in 2013, corresponding to the target price of HK$0.87 , given a “buy” rating for the first time.