Goldman Sachs published a report that initially gave Zhenmingli (01868-HK) a neutral rating, with a target price of HK$2.7, 13 times the price-earnings ratio for 2012.

According to the report, the company is the only vertical manufacturer of LED lighting products in mainland China, and its business covers the entire LED industry chain; however, it believes that the industry structure is not yet stable and mature. It believes that Zhenmingli will have to face thresholds such as patents and technology in the future. At the same time, developing overseas distribution business and establishing production bases may also cause the business to lose focus and consume resources, limiting business and profit growth.

Zhen Ming Li rose 2.45% last Friday to close at HK$2.51.