The company is the leading enterprise in the domestic copper strip market, mainly engaged in the research and development, production and sales of copper strip and foil. Based on the non-ferrous metal Calendering industry, after years of technology accumulation, the company has mastered the technical technology of the key links in the production of copper belt and foil products. it has become one of the major enterprises with large operation scale and leading technical strength in the domestic copper belt and foil industry. The company uses electrolytic copper as raw materials, after more than 10 years of development, using independent research and development of a number of patented technologies, production processes to organize production, the company's production capacity of copper belt and foil products from the beginning of the establishment of 0.6 thousand tons / year, gradually increased to the current 100,000 tons / year, the production capacity of copper belt and foil products has been significantly improved, to be able to provide customers with multi-variety, multi-specification copper belt and foil products. In 2021, China produced 810000 tons of copper strip, while the company produced 109900 tons in 2021, accounting for 13.57 percent. Because the copper strip and foil has the characteristics of high copper content, good electrical conductivity and thermal conductivity, the company's products are widely used in transformers, power cables, communication cables, radiators, heat exchangers, electronics and electrical appliances and new energy fields. In recent years, the company's sales of new materials have risen in both quantity and price, and the capacity utilization rate of 2019A-2022Q1-Q3 has maintained a high level. The capacity utilization rate of new materials of 2019A-2022Q1-Q3 Company is 102.14%, 111.07%, 109.93% and 111.68% respectively, and the production and marketing rates are 100.17%, 98.95%, 99.96% and 100.4%, respectively.

The company's traditional main product production line continues to transform and upgrade, and the production expansion project is actively promoted. The company's copper plate and strip business continues to carry out technical transformation and upgrading and actively build new production lines on the basis of the existing production lines. through the company's subsidiary Yongjie Copper, the new production line with an annual output of 100000 tons of high-precision copper alloy strip and 50,000 tons of copper strip billet is being actively promoted. After the Yongjie copper project is completed and put into production, it is estimated that the company's copper strip production capacity will reach 200,000 tons / year in 2025. The Calendering copper foil production line was put into production in 2021 and is currently in the stage of capacity climbing. In the first half of 2022, 1112.23 tons of copper foil were produced. The company's Calendering copper foil products are mainly used in LED, printed circuit boards, new energy soft connections, plate heat exchangers, back glue copper foil, etc.; at present, the processing thickness of Calendering copper foil products has reached 9 microns.

On the basis of the steady growth of the original main business, the company has actively expanded its business in the field of new energy, and has basically realized the closed loop of the new energy battery industry. Zhongyuan New Energy, a subsidiary of the company, was established in October 2021 and put into production in April 2022. It has an annual production capacity of 100000 pieces and is currently climbing its production capacity. its main products are battery pallets for new energy vehicles, and its main customers are Chery and Nezha. And undertake the battery package tray business of the whole series of Chery and Nezha new energy vehicles. In July 2022, Zhongyuan New Energy plans to expand its production capacity, expanding the annual production capacity of new energy vehicle battery packs and energy storage battery pallets to 500000 pieces. Zhongyuan Aluminum foil, a subsidiary of the company, has invested in a new battery foil project with an annual output of 50,000 tons, of which the first phase of 25000 tons of battery foil is one of the company's private investment projects in 2022, and the project construction is being actively promoted. The company and related parties jointly invested in the establishment of Shenzhen Zhongyuan Xineng Technology Co., Ltd., whose main business is to promote the formation of enterprise user-end energy storage system products and operation system service model led by energy storage system integration product solution; formulate and form a standardized system for energy storage integrated operation We will actively distribute energy technology innovation and business model innovation in the energy field, build a new ecological network system of "source network load storage", and create a system platform. Industrial and commercial registration has been completed in July 2022 and is actively expanding related business. Seizing the opportunity of the development of new energy and new materials industry, the company is expected to produce 200000 tons (20,000 tons of copper foil) copper-based materials in 2025, 50,000 tons of battery aluminum foil, more than 1 million battery metal structures, expand the (user side) energy storage market 800MWh~1GWh, and produce 50,000 tons of high-end anticorrosive materials and thermal insulation materials.

The company's investment center fosters and incubates some high-quality projects based on sophisticated products to screen, reserve and cultivate high-quality assets for the implementation of the company's strategy. Luoyang Tongyan, which is invested by the company, is an equipment manufacturer specializing in the R & D and manufacture of intelligent equipment and high-end equipment, and its team has strong R & D capabilities. Luoyang Copper Research Co., Ltd. cooperates with the company to continuously optimize and improve the company's copper foil mill and other production equipment to improve the technical level of domestic equipment. Harbin Harbin New Materials Technology Co., Ltd., a subsidiary of the company, has set up a production base in Mingguang City, Anhui Province, with an annual production capacity of 50,000 tons, which is currently under construction and is expected to be completed in the second half of 2022. Its main products are anticorrosive materials and thermal insulation materials, among which anticorrosive materials can be used in heavy anticorrosive environment, and anticorrosive materials can be mainly used in shipbuilding, chemical industry, military industry, bridges and other fields.

Give the company an investment rating of "overweight". It is estimated that the EPS of the company in 2022, 2023 and 2024 will be 0.70,0.83,1.28 yuan respectively, and the corresponding PE will be 23.33,19.72,12.79 times respectively according to the closing price of 15.98 yuan on February 7. In recent years, the production and marketing of the company's main copper products have achieved rapid growth, and the new business plate has been continuously expanded. at present, the closed loop of the new energy battery industry has been basically realized. The downstream demand of the company has achieved rapid growth in electronics, electric power, new energy vehicles, power batteries and other industries, and the company's revenue and profits are expected to continue to grow. At present, the company's valuation level is relatively reasonable, combined with the development prospects of the industry and the company's industry status, covering for the first time, giving the company an "increased" investment rating.

Risk hints: (1) the Fed raised interest rates more than expected; (2) the international macroeconomic downturn; (3) geopolitical conflicts intensified; (4) changes in industry policy; (5) copper prices fluctuated sharply; (6) downstream demand was lower than expected; (7) the supply of corporate capacity was lower than expected.