Report summary: The company has the highest lead smelting production capacity in China. The company currently has a lead melting capacity of 300,000 tons (including 1 oxygen-rich bottom blowing+blower furnace production line and 2 oxygen-rich bottom blowing+reduction furnace production lines) and 400,000 tons of electrolytic lead. Leading comprehensive utilization. The company's lead business is hovering on the break-even line; profits mainly come from by-products. Among them, businesses such as precious metals and crude copper are the main sources of the company's profits. By-products such as crude copper and sulfuric acid are more profitable mainly because these elements are not valued in lead concentrate. In the future, the company will further deepen the comprehensive recycling of resources through the smelting slag project. Resource bottlenecks are difficult to break through. The company has been focusing on expanding upstream resources since the beginning of the 21st century, but there have been few results. Currently, it has only participated in mines such as Longyu Mining, KBL, and SORBY HILL. The parent company Yuguang Group also owns some mines, including Baohui Mining, etc., but there are no investment considerations yet. The recycled lead business is growing steadily. The company has formed a relatively complete recycling network centered on Henan and Jiangxi. Currently, the company has two recycled lead pretreatment production lines, with a production capacity of processing 360,000 tons of used batteries and 180,000 tons of lead raw materials. The contribution of recycled lead raw materials is increasing year by year, but there is still room for improvement in production capacity utilization. The recycled lead business itself has limited profit contribution, but it has strategic value such as guaranteeing the supply of raw materials. In the future, as the rectification of the recycled lead industry accelerates, the industry pattern may change. Earnings forecasts and ratings. The company's performance is expected to be 0.21 yuan in 2012, and the results for 2013 and 2014 are 0.49 and 0.54 yuan, respectively. The corresponding PE levels are 80x, 34x, and 30x, respectively. Although there is room for lead prices to rise, the short-term outlook for precious metals prices is bleak, so we maintain the company's “careful recommendation” rating for the time being. Risk warning: The prices of the company's lead, precious metals, crude copper, sulfuric acid and other products have unfavourably changed beyond expectations, leading to a decline in by-product profits; the supply of the company's raw materials - lead concentrate and lead-acid batteries is tight; the progress of the company's recycled lead business or the integration of the recycled lead industry has fallen short of expectations.