From January to September 2010, the company achieved operating income of 580 million yuan, an increase of 1.55% over the same period last year; the net profit belonging to the owner of the parent company was 30.6731 million yuan, an increase of 33.23% compared with the same period last year. In the third quarter, the company achieved operating income of 120 million yuan, down 33.13% from the same period last year and 39.98% from the previous year; the net profit belonging to the owner of the parent company was 3.0931 million yuan, down 56.23% from the same period last year, and 73.17% from the previous month.

Gross profit margin rose steadily in the third quarter. From January to September, the company's comprehensive gross profit margin was 29.05%, up 0.92 percentage points from the same period last year; mainly because the company's comprehensive gross profit margin was 30.76% in the third quarter, up 2.53 percentage points from the same period last year. The expense rate during the period from January to September was 19.79%, an increase of 2.16 percentage points over the same period last year. Among them, the management expense rate was 9.79%, up 1.83% from the same period last year; in the third quarter, the company's expense rate was 24.65%, up 3.80% from the same period last year. Among them, the rate of management expenses was 17.49%, an increase of 5.42 percentage points over the same period last year.

Results deteriorated in the third quarter. The company's leading products are automotive diaphragm spring clutches, mainly for FAW Jiefang, Changan and other commercial vehicle manufacturers. FAW Group and its affiliated enterprises are the main source of the company's sales revenue, accounting for about 44% in the first half of this year. From January to September this year, FAW sold 159000 Jiefang vehicles, compared with more than 200000 in the same period last year, down more than 20% from the same period last year. At the same time, sales growth of other commercial vehicles such as Chang'an was also lower than expected. All these have affected the sales of the company's products to a certain extent. Although the company opened up 14 new mainframe manufacturers in the first half of the year, the market share has expanded to a certain extent, but it is difficult to stop the malaise of the whole industry. The impairment loss of assets in the first half of last year reached 18.27 million yuan, accounting for more than 80 per cent of the net profit for the whole of 10 years, resulting in a relatively low net profit base last year, and the company's net profit for the whole of this year is expected to increase significantly.

Clutch production capacity improvement project continues to move forward. By the end of June this year, 26% of the company's 3.6 million clutch technical renovation projects had been completed, and production is expected to be fully reached in 2013. The new capacity will help the company to further expand its market share and enhance its profitability. It is estimated that after full production, the sales revenue will increase by 255.23 million yuan and the operating profit will increase by 56.16 million yuan.

Profit forecast and rating. It is estimated that the company's EPS from 2011 to 2013 will be 0.25,0.35,0.47 yuan respectively. Based on the closing price of 10.60 on October 19th, the corresponding dynamic price-to-earnings ratio is 43,30 and 22 times respectively. Considering the obvious decline in the company's performance in the third quarter, and it is difficult to restore growth in the downstream market in the short term, downgrade the investment rating to "neutral".