Guide to this report: The company is one of the leaders in the field of electric contact composites in China. Downstream demand is affected by fixed asset investment, and the short-term growth rate may slow down. Major customers are highly dependent, and the future focus is on developing new customers and exploring market demand. Investment points: The first listed company for electrical materials, with a domestic market share of about 6.5% in 2010, ranking third among similar products in the electrical alloy industry for its comprehensive strength. The compound revenue growth rate from 2008 to 2010 was 63.9%, and the company's net profit was 8.93 million yuan, 21.44 million yuan, and 44.25 million yuan respectively. The company's profit model is relatively simple, and downstream customers are concentrated. It mainly supplies parts to low-voltage electrical appliance manufacturers such as Zhengtai Electric, Delixi, and Cooper, etc., and earns processing profits through additional technology. Establishing long-term cooperative relationships with major customers has benefited from the steady growth of the low-voltage electrical appliance industry. The industry uses a peer-to-peer direct sales model for non-standard products, and in order to ensure product quality and maintain supply stability, suppliers are generally not easily changed. The customer base is stable, but technical barriers are low, added value is not high, and market competition is fierce. The recent slowdown in fixed asset investment growth has affected downstream demand growth, developing or contributing to increased performance through new customer development. The downstream of the electrical alloy industry is the field of low-voltage electrical appliances. The growth rate has been affected by fixed asset investment, and the macroeconomic sentiment has declined or development has been hampered. The overall market capacity is relatively stable. Since industry barriers are low, it is difficult to increase concentration in the short term, and the company's future development mainly depends on developing new customers and increasing sales from old customers. The total sales revenue of the company to the top five customers has always accounted for more than 70% of current revenue. Risk warning: Competition for large customers is intensifying, and risks need to be prevented. Zhengtai Electric is the company's largest customer, and the top five suppliers of Zhengtai Electric include Fuda Alloy and Wenzhou Hongfeng. Fuda Alloy ranks first in the industry in terms of output value. As the growth rate of fixed asset investment slows down, competition for major customer resources within the industry is becoming more intense. Profit forecasting and valuation pricing. The company's 2011-2013 operating income is estimated to be 810 million yuan, 1.01 billion yuan, and 1.25 billion yuan, respectively, and net profit of 83 million yuan, 101 million yuan and 121 million yuan respectively. Based on 70.83 million shares after issuance, the corresponding earnings per share are 1.17 yuan, 1.42 yuan and 1.71 yuan respectively. The recommended inquiry range is 18.4-21.2 yuan, which corresponds to 16-18 times PE in 2011.