Investment Highlights The company is one of the major electrolytic aluminum producers in China. After the new project is put into production, the market share of electrolytic aluminum is about 4%, which plays a decisive role in the domestic electrolytic aluminum industry. In addition, the company also has 200,000 tons of aluminum. Carbon, 50,000 tons of aluminum processing, 20,000 tons of fluoride salt and 10,000 tons of refined aluminum processing capacity, the strength is more abundant.

The company is located in Shanxi, a major energy province, and has its own power plant. It is strongly supported by the national and local governments and has a good power cost advantage.

The company pays attention to technological innovation and quality management, and its technology level, major economic and technical indicators, and quality inspection and control level are in the leading position in the same industry.

Due to the reduction in output of electrolytic aluminum, the new production capacity of alumina and electricity, the future supply and demand of alumina and electricity will be eased, prices will fall, and the cost of electrolytic aluminum will fall.

In the near future, China's industries such as housing construction, transportation, and packaging will continue to maintain a high level of development. The domestic demand for electrolytic aluminum will continue to grow, and will also drive up the price of electrolytic aluminum. Lower costs and higher prices will effectively expand the industry's profitability.

The objectives of macro-control are mainly to increase industrial concentration, update technology, and promote the development of high-quality companies.

In the predicament, the company can effectively tap the potential of production and management, achieve profitability, and have a higher ability to resist risks.

In cooperation with Chinalco, the newly commissioned project will be able to obtain a stable and cheap supply of alumina. In addition, the company will have the advantage of cost of electricity, the cost of new projects will be further reduced, and the profitability space will be greatly expanded.

The external environment of the company has been continuously improved, and the cost technology and management advantages have been further enhanced and will become a strong driving force for future growth.

The share reform has a high level of consideration, and fully respects the contribution of the shareholders of tradable shares. After the share reform, the company's equity structure and corporate governance structure will increase. The future growth capability will be strong. The share price will be low and the investment value will be significant.

The company has superior geographical conditions and a comprehensive strength

Shanxi Guanlv Co., Ltd. was established in 1998 and currently owns 4.252 billion yuan in total assets. It is a national large-scale enterprise and is a large state-controlled nonferrous metal smelting and integrated processing enterprise in Shanxi Province. It is also an important electrolytic aluminum in China. One of the production companies. The company is mainly engaged in the production of aluminum and aluminum processing products, including electrolytic aluminum, aluminum wire, aluminum foil, electronic foil, aluminum bar, etc. Up to more than twenty kinds of products, has formed a diversified industry based on aluminum smelting Chain, building a high-tech, multi-product, precision processing, professional cluster framework. Guanlv's current production scale is annual production of 115,000 tons of electrolytic aluminum. With the newly-built 220000 tons of electrolytic aluminum that can be put into production in the beginning of the second quarter of this year, the company will become one of the largest electrolytic aluminum producers in China. The market share is about 4%, which plays a decisive role in the domestic electrolytic aluminum industry. The company currently also has 120,000 tons of aluminum carbon, 50,000 tons of aluminum processing, 20,000 tons of fluoride salt and 10,000 tons of refined aluminum processing capacity.

First, it is located in a major province of energy, and is powered by its own power plant. It is supported by the local government and has significant cost advantages.

In the company's leading product electrolytic aluminum production, electricity costs account for about 35% of the total cost, and alumina accounts for about 45% of the total cost. As the company is located in Shanxi Province, China's largest energy province, its coal reserves and reserves of bauxite rank high in the country. The company is also close to the larger aluminum oxide base in China, namely Chinalco Shanxi Branch, enabling the company to have resources and costs. Unique competitive advantage. With the gradual addition of new alumina production capacity, the alumina market will switch from a supply-demand gap to a supply easing. It is expected that prices will fall, which will further reduce the company's costs. In terms of electricity tariffs, the company received support from the local government. The start-up of the company's self-owned power plant project also reduced the company's cost of electricity bills. This has a considerable cost advantage.

Second, the company attaches importance to technological innovation and quality management, so that product quality and competitiveness will always maintain the leading domestic level

With the rapid development of global economic integration and science and technology, technological innovation has become the life project of modern enterprises. The high-quality scientific and technological talents, formed by the strong scientific and technological forces, make the company's main business electrolytic aluminum production of the main technical and economic indicators, in the same industry in the country, has always been in a leading position. In recent years, the company has completed a total of 60 technological transformation projects, received 1 provincial-level scientific and technological achievements, obtained 15 scientific and technological achievements above the city, 3 patents, issued 122 scientific and technological thesis, and co-organized a “Master of Engineering” program to train students. A scientific and technological team that has the courage to tackle problems has emerged a number of innovative and talented scientists and technicians. The company aims at world-class, relying on scientific and technological progress, speeding up structural adjustment, using information technology to drive industrialization, and using high technology to transform traditional industries. The main economic and technical indicators and comprehensive comparable costs are all in the leading position in the country, ranking sixth in the country. The production and sales rate is 100%, the recovery rate of goods is 98%, and the product has zero inventory. In addition, in 1998, the company reported the establishment of a "provincial enterprise technology center" with technological innovation as its main body. There are three sets of two rooms and one set, namely Metal Smelting Department, Metal Processing Department, General Department, Network Room, Central Laboratory and Expert Group.

While focusing on technological innovation, the company also attaches great importance to product quality management. In many years of production and operation, quality work has always been the top priority for the development of the company's production. From the top leaders of the company to the employees of ordinary production at the company's front line, they can perform their respective quality duties well, thus making the company's product quality in the market. Build a good reputation. In order to ensure good quality, the company is equipped with more than 20 sets of large-scale testing equipment and is fully equipped. The X-Fluorescence Diffraction Spectrometer, which is currently worth nearly RMB 3 million, will provide as many analytical tools as possible for the company's scientific research. As the scale of production continues to expand, the company will invest more millions in testing equipment. The first-class testing level is the key to the company's good entry into the factory and its manufactured products. The product has been appraised as “National Customer Satisfaction Product” by China Quality Association, and passed ISO9002 International Quality System Certification. The company has been appraised as “National Customer Satisfaction Enterprise” by China Quality Association, and its reputation in the bank is AAA. In 2000, he obtained the right to self-import and export of foreign trade and was a member of the Shanghai Metal Exchange.

The growth of domestic demand, the gradual reduction of costs, the clear objectives of macro-control, the conditions for industrial recovery gradually mature

Due to the characteristics of production, aluminum output remained inertial growth in 2005, but the growth rate slowed down. At present, due to the increase in raw material prices and the rapid increase in production capacity, the entire aluminum industry suffers more serious losses. However, due to the capital's profit-seeking nature, domestic new alumina and power production capacity will be gradually put into production, the contradiction between supply and demand of raw materials will be eased, prices will fall, and the distorted profitability of upstream and downstream industries will be corrected. In addition, with the continuous growth of the real estate construction industry, transportation and packaging industries, aluminum demand will continue to grow. The country’s macroeconomic policy has a clear orientation, mainly reducing the export of high-energy-consuming products, increasing industrial concentration, making the aluminum industry grow from crude to refined, developing from strength to strength, and further enhancing industrial competitiveness, indicating that the pace of industrial restructuring and integration will accelerate. .

1. Aluminum production continues to grow, but the growth rate has slowed down. Due to high costs, the industry has suffered more losses.

China is the world’s largest producer and consumer of electrolytic aluminum. In the past two years, China's production of electrolytic aluminum has slowed down significantly (from 17% growth in 2005 to below 10%) due to the tightening of alumina and policy controls, but the overall output still reached a record high. In 2005, the output of primary aluminum and its products in China grew inertially, but the growth rate began to slow down and the overall size of the industry was shrinking.

In the first half of 2005, the output of aluminum products showed an inertial growth trend. In the second half of the year, the production was basically stable, with a monthly output of about 550,000 tons. Compared with the same period in 2004, there was a certain increase, but there was a slight decrease in the growth rate. In February, March, July and October, the increase in single month saw a significant drop. From the perspective of average daily output, aluminum output shows an inertial growth trend, but the growth rate is decreasing. In particular, the average daily production in October showed a slight decline compared with September, and the average daily output decreased by 1%. Due to the need for continuous production in the aluminum industry, once the production is stopped, restarting losses will be greater. Taking a large tank with an annual output of 200,000 tons and 280 kA as an example, if the production is completely suspended and then restarted, replacing only the inner lining material in the electrolytic tank requires a cost of about 120 million yuan. Therefore, the inertia of aluminum production is greater. Therefore, although the reduction in aluminum output in 2005 was limited, it can also be reflected from the side, aluminum production in China is being adjusted, and has shown some results. As China's aluminum production ranks high in the world and its output accounts for 19.3% of the world's aluminum production, as long as the growth of domestic aluminum production is controlled, it will also play a significant role in global aluminum supply.

The production cost of electrolytic aluminum accounts for more than 70% of the price of electricity and alumina. Since the electrolytic aluminum project was continuously put into operation, the alumina price of its raw materials has been steadily increasing since 2002, and although it has declined somewhat, it remains at a relatively low level. High level. The current import price of alumina ports is about RMB 6100/tonne. On the other hand, the continuous development of heavy industry in recent years has intensified the contradiction between the supply and demand of electric energy. Not only did the previous electricity price concessions disappear, but the price of electricity continues to rise. In 2004, China eliminated the 8% export tax rebate for aluminum and imposed a 5% export tax on copper and aluminum exports, which will increase domestic aluminum exports by 13% on the original basis. The high cost of production has caused the overall loss of the aluminum industry in China to be more serious. According to the statistics of the Non-Ferrous Metals Industry Association, as of November 2005, 43 aluminum plants have been completely shut down, of which 16 companies have ceased production in 2005. It can be seen that the restructuring of the industry has already taken place. In December 2005, in order to resist the rise in alumina prices, 23 domestic electrolytic aluminum companies reached an initiative to reduce output by 10%, and some companies have already implemented it.

In the past, nearly half of China’s primary aluminum products were exported, but after August 2005, China’s aluminum exports fell sharply, reflecting the effect of its policy changes; after October, with the restoration of domestic and foreign price relations, exports have For the better, in November, it was once again approaching 100,000 tons.

2. The production capacity of alumina and electricity will continue to expand. It is expected that the contradiction between supply and demand will be eased in the future, and prices will fall back.

From the perspective of domestic alumina demand, as the country will continue to strengthen macro-control in 2006 and reduce excess capacity in the electrolytic aluminum industry, alumina demand growth will slow down. Recently, due to the rising price of fuel and carbon dioxide emissions, European electricity prices have risen by 36%, and Europe plans to shut down electrolytic aluminum, which currently has a capacity of 1,070,000 tons. This is insignificant compared to the domestic production capacity of more than 10 million tons of electrolytic aluminum in China, but it forced the price of alumina, which had only risen in the past, to loosen. On the supply side, due to the high profit margin of alumina in recent years and the stimulation of new investment, a large number of new alumina production capacity will be gradually put into production, and the market will also shift from a supply-demand gap to an oversupply. The Ministry of Commerce's Foreign Trade Department released an analysis report on December 1. It pointed out that in 2006 China's alumina import demand will slow down, and the increase will fall sharply. The tension and supply tension will be eased. According to its forecast, global alumina production in 2006 is expected to be 60.07 million tons, with a demand of 65.67 million tons, and oversupply of 400,000 tons. Changes in the supply and demand will cause the alumina prices to fall.

In terms of electricity, the lack of power in the past two years has stimulated new developments in the power industry. In the first three quarters of 2005, the tension in power supply and demand was significantly eased. According to the current investment situation, one or two years later may appear again "electricity surplus" situation, then the impact of electricity prices on aluminum will weaken.

Third, as the construction, automotive and other industries still have considerable room for development, aluminum industry demand will continue to grow in the future.

In the future, aluminum consumption in China's housing construction, transportation, and packaging will still have significant growth potential. These industries are the major industries for aluminum consumption. Developed countries’ aluminum consumption in these industries accounts for more than 70% of total consumption. The consumption of aluminum for domestic construction accounted for the first place, accounting for 36% of China's aluminum demand. In the first 11 months of 2005, China's housing completed area was 280 million square meters, an increase of 18.6% year-on-year, an increase of 6.9 percentage points. It can be seen that after the housing construction industry has undergone severe regulation and control, the inertia of growth is still there. In the long run, despite the fact that the real estate industry is a key area of ​​macroeconomic control, China’s population base is large, and the demand for housing will continue to increase. The process of urbanization in China will further stimulate aluminum consumption. Strong urban labor force growth will support retail and schools, hospitals, bus stations and residential infrastructure. The transportation industry is the second largest industry for aluminum consumption. With the rapid development of the domestic logistics industry, it has driven the development of freight cars and aluminum containers. At the same time, due to the need for energy conservation, transportation has the need to reduce weight and weight, especially when the price of oil remains high. In particular, weight reduction and energy saving are particularly important. Vehicles such as automobiles are better at reducing weight. Aluminum material. The auto industry has only just begun in China. Although the growth rate in 2005 was lower than that in 2004 due to the influence of macro-control, it still has the potential for long-term growth. Despite the oversupply, the increase in income and tourism following the increase is the continuing growth of consumer packaging and durable consumer goods industries. In addition, as China is gradually becoming the center of global manufacturing, parts of various exported components and finished products also need to consume a large amount of aluminum materials, so the demand for aluminum has further increased. It is predicted that the demand for aluminum in China will reach 10.5 million tons in 2010. There is a huge market space in the next 15 years.

Fourth, macro-control policies will still control the total amount, but will be tilted toward high-quality enterprises.

Electrolytic aluminum is an energy-intensive commodity. Before regulation and control, half of China’s aluminum output is used for export, while China is an energy-shortage country. Exporting primary aluminum is equal to exporting energy in disguise. Therefore, since 2004, the country has exported electrolytic aluminum tax rebates from 15 The percentage dropped to 8%. In 2005, the export tax rebate was completely abolished, and 5% of export tariffs were imposed. In August, alumina was included in the list of banned commodities in processing trade, which eliminated the preferential policies for processing alumina. After adjusting the tax rate, export-oriented export-oriented enterprises have no profit at all. It shows the government's inhibition of energy-intensive commodity exports. Recently, the Ministry of Finance and the State Administration of Taxation have decided that since 2006, the 30% reduction of non-ferrous metal mineral resources tax will be abolished and the restoration will be resumed in full. It further clarified the country's domestic aluminum production capacity and export expansion policy.

In September 2005, the State Council executive meeting discussed and adopted in principle the "Special Plan for the Development of Aluminum Industry" and the "Aluminum Industry Development Policy." The meeting pointed out that the development of China's aluminum industry, in the guiding ideology, we must adhere to the scientific concept of development, continue to strengthen and improve macro-control, focus on controlling the total, optimizing the structure, rational distribution, reduce consumption, promote the aluminum industry to take a new road to industrialization, Realize the transition from big to strong. By the end of 2004, the average size of electrolytic aluminum plants in China was 65,000 tons, while the average size of foreign companies was 190,000 tons. This principle clarifies that the development direction of the aluminum industry is to increase industrial concentration and upgrade technology. This policy orientation will provide a better development platform for high-quality, large-scale and high-tech electrolytic aluminum companies, and it also indicates that the pace of reorganization and mergers among aluminum companies will accelerate.

The company's business is stable and cooperation with Chinalco will further enhance the company's competitiveness

Guanlv's shares have risen sharply in raw material prices, macroeconomic controls have affected the company’s exports, and 80% of companies in the same industry have lost money. In 2005, they were still able to realize profitability, fully demonstrating the strong anti-risk capabilities of the company and indicating that the company’s management is sound. Can fully tap potential and play a competitive advantage. At the end of 2005, the company established a joint venture company with Chinalco, which not only enabled the company to obtain a more stable and low-cost alumina supply for its new construction projects, but also benefited from China Aluminum's management advantages and Chinalco's shares in markets, technologies and other aspects. The advantages make the company's competitiveness further enhanced.

First, in the unfavorable market environment, the company has achieved remarkable results and showed strong competitiveness.

Since 1998, the company's main business income has continued to grow. Among them, the growth in 2001 and 2004 was significant, while the growth in the remaining years was relatively stable. Earnings per share mainly fluctuate between 0.2 yuan and 0.3 yuan, and the earnings in 1999 and 2002 were relatively good, reaching 0.3 yuan. In 2004 and 2005, due to the industry's macroeconomic policies, domestic electrolytic aluminum production capacity Factors such as rapid growth and cost increase, earnings per share have decreased, but they still maintain a profitable state, which is not easy under the background of sluggish industry and 80% of the same industry.

In the first three quarters of 2005, the company produced a total of 85,185.769 tons of electrolytic aluminum, an increase of 9% from 78,153.921 tons in the same period of last year; the main business income was RMB 2,144.587 million, which was 176,882 years earlier than the same period of last year. RMB 69,900 increased by 19.54%. As the raw material prices soared in 2005, the company’s costs increased significantly. Therefore, in the third quarter of 2005, it only achieved a net profit of RMB 20,704,700, which was a decrease of RMB 66,342,800 from the same period of last year. .79%. However, in the fourth quarter of 2005 and the first two months of 2006, the domestic supply of electrolytic aluminum decreased, the market demand was strong, and the price of electrolytic aluminum was higher. It is expected that the company will continue to maintain profitability in 2005 and the first quarter of 2006.

It is also worth mentioning that when the market conditions are unfavorable, the company can effectively tap the potential of production, strengthen internal management, and strive to increase product output in order to make up for the decline in profit margins. In recent years, the company's operating, management, and financial expenses have been declining year after year. In the first three quarters of 2005, the three expenses realized a negative growth with a growth rate of -21.36%. It shows that the management level of the company has been continuously improved and management performance has been shown.

Second, the external development environment of the company is improving, production and management potential will be fully released, and the future will be bright.

At present, the average size of electrolytic aluminum in China is less than 65,000 tons, and the production capacity of enterprises is seriously insufficient. At present, there are tight energy sources and soaring energy prices. The extensive electrolytic aluminum industry will no longer be able to meet the market. The country’s macroeconomic control policies in recent years are also more clearly oriented. The main purpose is to enable a group of electrolytic aluminum companies with small scale, backward production processes and high energy consumption to withdraw from the market. This will be a good opportunity for developing large-scale electrolytic aluminum production companies such as Guan Aluminum, with unique cost advantages and economies of scale. Guan Aluminium has a sufficient amount of alumina powder supply contracts, which results in a lower procurement cost of raw materials for Guan Aluminium, with a singleton consumption index of only 13897 degrees per ton of aluminum, and coal production in Shanxi, which also has a lower national electricity price. The production cost of electrolytic aluminum for shares has been steadily reduced and it has a strong market competitiveness. The commissioning of the 200,000-ton electrolytic aluminum project will enable the company to usher in greater opportunities for development. In the future, the external development conditions of the company will be more relaxed, and the economies of scale will become more apparent. It is expected that after the 2004 and 2005 industry reshuffle, the elimination of a group of electrolytic aluminum production enterprises with low production capacity and backward production technology, the company will be able to obtain better In the competitive environment, the performance in 2006 will gradually recover.

The price of aluminum in the domestic futures market continues to record high prices, which is expected to drive the spot price higher and benefit the company’s profitability. With the gradual increase in the price of electrolytic aluminum, the profits from the high proportion of alumina supply contracts are expected to continue to grow. The appreciation of the renminbi will directly lead to the reduction of raw material alumina import costs. With the rapid expansion of production capacity and rapid cost reduction, the future development of the company is worth watching.

III. Cooperation with Chinalco, the two sides complement each other, the cost of new projects will be further reduced, and the profitability space will be greatly expanded.

In December 2005, Guanlv announced that the company will establish a joint venture with Aluminum Corporation of China Co., Ltd. for a joint venture of RMB 1 billion to establish Shanxi Huasheng Aluminum Co., Ltd. According to the announcement, Guanlv shares the entire operating net assets of its 200,000 tons electrolytic aluminum project as a capital contribution of 4.9 billion yuan, accounting for 49% of the registered capital; Chinalco shares contributed RMB 510 million in cash. It accounts for 51% of registered capital.

China Aluminum is a large aluminum oxide producer in China. It has already produced 98% of domestic aluminum oxide and has a production volume of 8.5 million tons. It has a leading and dominant position in the Chinese aluminum market. Chinalco has advantages in capital, technology, talents, management, and information, and has an important driving role in the development of China's aluminum industry. The cooperation between the two sides will not only provide a more stable supply of alumina, but also benefit from China Aluminum's management advantages and China Aluminum's advantages in the market, technology and other aspects, so that the company's new projects will benefit as soon as possible.

The 200,000 tons electrolytic aluminum project was started construction in 2001, and the actual production capacity can reach 220,000 tons after completion. Due to the adoption of 300KA large pre-baked tank technology, the project was approved by the former State Economic and Trade Commission and the State Planning Commission. The total investment of the project is 2.387 billion yuan, of which fixed-equity investment is 2.229 billion yuan (including foreign exchange 26.64 million US dollars), and the initial working capital is 158 million yuan. However, in the actual construction of the project, through the effective arrangement of funds, it is initially estimated that the actual fixed asset investment of the entire project can be reduced to about 1.9 billion yuan. The project adopted a self-designed 300KA large-scale prebaked electrolytic cell designed by the Shenyang Aluminum Magnesium Design and Research Institute with a total of 276 units. The annual production capacity is 222,654 tons. Advanced production technology, excellent environmental performance, all technical indicators are in a leading position in the country. According to the project's benefit forecast, it is assumed that the aluminum ingot price is 15,400 yuan/ton, the alumina price is 3,200 yuan/ton, and the electricity price is 0.3 yuan/kWh. Irrespective of the interest expense factor, the project is expected to increase annual sales revenue by 272,443. RMB 110,000, new profit totaled 288.7613 million yuan, income tax 95,291,200 yuan, profit after tax 193,470,100 yuan; total investment recovery period 10.63 years (including construction period), financial internal rate of return 9. 22%. The construction period of the project is set at 3 years, and the entire project is scheduled to be put into operation at the beginning of April this year. The 200,000-ton project has paid enough attention to environmental protection and advanced pollution control. It has adopted a new generation of energy-saving and environmental-friendly electrolytic tanks with independent intellectual property rights developed in recent years. The pollutant discharge meets the requirements of the national emission standards. The environmental impact report has been approved by the State Environmental Protection Administration. If it is put into production, it should be able to exert good results. After the project is put into production, the company will continue to expand its market share by virtue of its unique cost advantage and scale effect. This will increase the company's future profitability, and the company's performance is expected to grow substantially. According to the forecast of CICC, it is expected that the profits of Guanlv shares will begin to increase in 2006, and the annual net profit will be 58 million yuan, and the earnings per share will be 0.16 yuan. In 2007, net profit will continue to grow rapidly to 167 million yuan, and earnings per share will reach 0.46 yuan.

Share reform further enhances the value of the company, and future growth can be expected

Recently, Guanlv announced the share reform plan. At the beginning of the plan, the tradable shareholders registered on the implementation date of the share merger reform plan received 3.00 shares for every 10 shares. After fully communicating with the shareholders of the tradable shares, they fully respected. On the basis of the opinions of the shareholders, the company adjusted the plan to the tradable shares registered on the implementation date of the equity structure reform program. The shareholders of the tradable shares received 3.40 shares per 10 shares, an increase of 0.4 shares for every 10 shares of the original plan, an increase of 13 %, which exceeds the reasonable price of 0.86 shares of the tradable shareholder of Huatai Securities estimated to be 2.532 shares per 10 shares, which exceeds the reasonable price level of 33%, and better protect the interests of the tradable shareholders. . This is due to the company's consideration of the level of consideration arrangements for similar listed companies and the implementation of this equity allocation plan. The stock price of the company is subject to certain uncertainties. The current stock price of Guanlv shares is low, combined with the share reforms that have been passed. In the stock plan, the average level of the number of shares received by each tradable share holder for every 10 shares is determined on the basis of fully communicating with the shareholders of tradable shares and fully respecting the interests of the tradable share holders and the right to make decisions at the relevant shareholders meeting in the classification vote. Among the aluminum companies that have implemented the equity reform program, Guanlv has a higher level of consideration.

In the above table, taking into account G Zhongfu’s cash compensation commitments, market participants estimated that the actual price level is about 10 to 2 shares. From the above table, it can be seen that the company's price level is much higher than that of other companies in the same industry, which fully demonstrates the company's sincerity in carrying out equity incentive reforms. Taking into account the profitability of Guanlv shares, the current secondary market prices of the company's stocks and the company's future development prospects, it can be said that this consideration arrangement is reasonable and enhances the company's investment value.

In this share reform plan, the rate of sending out of major shareholders reached 22%, and the ratio of shareholdings of the former major shareholders after the delivery of shares dropped from 50.15% to 38.64%, and the controlling position remained relatively stable. Therefore, the implementation of the share reform will not affect the continuity of the company's operations, and the company's operating and management advantages will remain unchanged.

Judging from the basis of share reform, the plan expresses the management’s recognition of the value of circulation rights. The company believes that the premium price of the per-share net assets before the issuance price includes the value of circulation rights paid by tradable-share holders to non-tradable shares and the company’s entrepreneurship. Value. Similarly, when a company refinances, the shareholders of tradable shares again pay the value of the tradable rights to the non-tradable shareholders in order to obtain the circulation rights. The non-tradable shareholder shares the share premium paid by the tradable shareholder at the expense of the flow right. Therefore, the non-negotiable shareholder can obtain the same circulation as the tradable shareholder by repurchasing the value of the circulating right paid by the tradable shareholder at that time. right. This basis is different from the basis of the current price-earnings ratio method commonly used in the market. It shows that the management of the company recognizes the contribution of the shareholders of tradable shares to the company's development from the root, and thus respects the interests of investors from the consciousness. From this perspective, the management of the company is worthy of the trust of investors, thus also enhancing the value of the company's investment.

With respect to corporate governance, if the smooth implementation of this share reform will increase the proportion of shares held by the original tradable shareholders to the total share capital of the company by 13.7 percentage points, from 40.29% to 53.99%, the increase range is 34%. It is beneficial to optimize the company's ownership structure and establish a more effective supervision and restriction mechanism. The share reform will also help improve the company's corporate governance structure and promote the continuous improvement of corporate governance. Reasonably resolving the issue of equity splitting will unify the value evaluation standards of all shareholders and promote the unanimity of the interest objectives of all shareholders, which will prompt the company's management team to realize the comparison of the company's brand and company value on the premise of fully considering the interests of all shareholders. Dahua, therefore, this shareholding reform will effectively promote the healthy development of Guanlv shares, enhance the company's overall value, and lay a solid institutional foundation for the long-term development of the company.

In the secondary market, although the current stock price has risen, it is still at a historically low level and the share reform plan has been implemented. If the share price is ex-cut, it will be around 2.9 yuan. Taking into account the continuous improvement of the external development environment of the company, the launch of new projects, and the further reduction of costs, the investment value of the company is obvious.

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