Regional leader in the field of modified asphalt for roads. The company is a private enterprise that produces modified asphalt, heavy duty asphalt, and emulsified asphalt. The self-developed “Guochuang” brand products are widely used in China's highways. According to the China Highway Society, in 2005-2007, the company's products accounted for more than 15% of the modified asphalt market for newly built highways in China, ranking among the top three in the same industry in the country. The company ranked first in the market for new highways in Hubei, Shaanxi and Guangxi during the same period. Demand for modified asphalt benefits from the fact that there is still plenty of room for highway construction. The demand for the company's products mainly comes from three aspects: 1) Demand for new highways. It is estimated that the average annual investment in highways between 2010 and 2020 is 100 billion yuan, and the country's investment of 4 trillion yuan will also drive road asphalt demand in 2010. 2) Demand brought about by road renovation and upgrading. At present, a significant portion of China's existing expressways still have concrete pavements, and there is a large need for reconstruction. 3) Maintenance requirements for existing highways. The new expressway will require maintenance for about 6-8 years, and this demand will provide a stable market for the company's products. The competitive advantage is average and is limited by fluctuations in the prices of upstream petrochemical products. The entry threshold for the modified asphalt industry is not high; it is a completely competitive industry. Currently, some multinational companies such as Shell, South Korea's SK, and Tepco have upstream and downstream integration and technological advantages, and are in a competitive position. Although the company has a certain competitive advantage among domestic companies, since the main cost of modified asphalt is substrate asphalt, and substrate asphalt resources are controlled by large companies such as Shell and South Korea's SK, profitability is limited by fluctuations in upstream crude oil prices. Judging from the fact that the company's gross margin is declining year by year, the company is in the middle of the industrial chain where bargaining power is weak. Analysis of fund-raising projects. The capital raised this time will be used for 4 projects, which are estimated to cost 217 million yuan. It is mainly used to expand modified asphalt production capacity and build technical center projects. The project cycle is 1 year. After completion, the company's modified asphalt production and sales volume are expected to increase by more than 200,000 tons, more than double the current scale. Since demand for road asphalt will continue to grow steadily in the next few years, we expect that the company's production capacity will be gradually digested and become the main driving force for the company's performance growth in the next few years. The reasonable value range is 14.1-17.3 yuan. We forecast the company's diluted earnings per share for 2010-2012 to reach $0.47, 0.69, and $0.88. The company's compound profit growth rate will reach about 30% over the next 3 years, but since the company's profitability is limited by fluctuations in upstream crude oil prices and bargaining power is poor, it is expected that the gross margin level of the company's main products will continue to decline. We think we can give the company 30 times PE in 2010 and 25 times PE in 2011, and the corresponding value range is 14.1-17.3 yuan. It is recommended to “buy carefully” online. Uncertainties. (1) Large fluctuations in raw material prices; (2) decline in highway investment.