Due to poor operation, the veteran PET packaging bottle manufacturer Zhuhai Zhongfu Industrial Co., Ltd. (hereinafter referred to as the company) is currently the most fully equipped, technologically advanced and largest professional manufacturer of PET bottles in China. The company provides food and beverage container packaging for the filling plants of American "Coca-Cola Company", "PepsiCo Inc", Unification and other international beverage companies in China, as well as for domestic famous beverage manufacturers. After the listing of the company, the original shareholders changed ownership for the first time due to poor management and fierce competition in the industry; six years after foreign capital took over, due to poor integration, it was announced again in 2013 that the company would change ownership. At present, the relevant share transfer has yet to be approved by the regulatory authorities.

Beverage packaging enterprises are in the pattern of oligopoly competition, the industry concentration is high, profit margins tend to be stable after years of high growth, the soft beverage industry has gradually entered a mature period, the future growth rate is expected to be maintained at about 10% for a long time. The good prospect of the beverage industry has brought opportunities to the beverage plastic packaging enterprises, but under the influence of the fierce competition in the beverage industry, the beverage enterprises have more and more stringent control over the packaging cost, coupled with the competition in the same industry and the gradual integration of some manufacturers. The profit space of beverage packaging manufacturers is meagre, withstanding a severe test.

Investment highlight 1, hidden assets: the company has about 1.8 billion of hidden assets. The early expansion of the company is accompanied by the layout of international beverage giants in China. As a matching factory for beverage manufacturers, the company's early base is mainly located in the development zones of domestic first-and second-tier cities. After years of development, most of these places have become local city centers, and land assets have been greatly appreciated. As of December 31, 2013, the land use right in the company's intangible assets is only 189.7 million yuan, while it is roughly estimated that the market price of land use right in the early years of the company is about 2 billion yuan. According to this, it is estimated that the company has hidden assets of about 1.8 billion yuan.

The second bright spot of investment and the reversal of the dilemma: the company will reverse its losses and remove its cap in 2014 is a high probability event in accordance with the "business optimization integration plan" drawn up by the company in 2013. In 2014, the company carried out business optimization and integration in two aspects: improving operating performance and improving cash flow. The benefits of business integration have been gradually reflected in the first quarter of 2014. In 2014, on the one hand, the company has benefited from the improvement in the operational efficiency of the main business, at the same time, it has benefited from the release of depreciation pressure brought about by the substantial depreciation of fixed assets and the one-time profit and loss brought about by the disposal of idle land. The company's results can be expected in 2014.

Taken into consideration, the company has the dual investment logic of safety margin and dilemma reversal, and the investment rating bought by the company is more comparable, and the company's PB valuation is higher. This is mainly because the above valuation does not take into account the company's hidden assets. If the company's hidden assets are calculated at fair prices, the company's PB is less than 1, with a larger margin of safety. In terms of performance, the company is at an operating inflection point, and the worst time has passed. In the future, the improvement of operating efficiency, reduction of depreciation pressure and disposal of idle land can contribute to the performance of the company. Comprehensively consider that the company has the dual investment logic of safety margin and dilemma reversal, and give the investment rating to the company.