Guoyuan Hong Kong published a report stating that the first investment rating for Zhongyi Fine (02341-HK) was a purchase. The PE method was used to value it, and the target price was set at HK$2.39. The target price is equivalent to the company's price-earnings ratio of 7 times in 2010, and there is room for 35% increase from the current price. The report points out that China's leading fine chemical group. Zhongyi Fine is a leading fine chemical group in China. The company uses natural renewable plant resources as raw materials and uses fine organic chemistry and separation technology to produce three major products: aromatic chemicals (also known as fragrance raw materials), natural extracts, and pharmaceutical intermediates. As raw materials produced by downstream flavor and fragrance companies, these products are mainly supplied to companies such as Givatton, International Flavors and Fragrances, Firmenich, Nestle, and Procter & Gamble. The leading process of the one-step water process gives the company's industry peers significant cost and product quality advantages. The global flavor and fragrance industry is growing rapidly. In recent years, international fragrance and essence trade sales have shown a growing trend. After deducting the impact of the depreciation of the US dollar, the average annual growth rate of global sales has reached 4-8%. Demand was strongest in the Asia-Pacific region, with an annual growth rate of 7.3%. In terms of downstream demand, in recent years, sales of food and beverages, tobacco and alcohol, cosmetics and daily necessities in China have continued to grow by around 20%. In the future, as domestic consumption starts and consumption upgrades accelerate, the growth of the flavor and fragrance industry is still very impressive. Gross margin is expected to rise steadily. The price of turpentine, the company's main raw material, continued to rise in the first half of 2010, but the company's raw material supply remained stable. Considering the high inflation expectations during the year, the price of raw materials is expected to rise by about 22% throughout the year. However, in the first half of the year, the company raised the ex-factory price of its products twice. The company's gross margin margin increased compared to 2009, and the company's gross margin level is expected to rise again. As the share of food fragrance ingredients with high gross margins rises in the next few years, gross margin is still expected to remain high. Zhongyi Fine closed yesterday at HK$1.74.