From January to September 2009, the company realized operating income of 670 million yuan, down 9.86% from the same period last year, and operating profit of-300000 yuan. The net profit attributed to the parent company was 14.16 million yuan, down 32.29% from the same period last year, and earnings per share was 0.06 yuan. Of this total, the operating income in the third quarter was 262 million yuan, down 2.07% from the same period last year, and the net profit attributed to the parent company was 3.24 million yuan, down 67.04% from the same period last year, and earnings per share was 0.014 yuan.

The performance of the main business is poor, and non-operating income supports the company's performance. The company's main products are machine tools, food machinery, elevator parts, gearbox, affected by the financial crisis, the company's machine tool and gearbox industry market demand is low, resulting in a sharp decline in industry-wide profits. According to data from the Bureau of Statistics, from January to August 2009, the business of 743 metal cutting machines in the industry reached 56.432 billion yuan, down 1.8% from the same period last year, and the operating profit was 2.877 billion yuan, down 22.83% from the same period last year. It can be seen that from the perspective of the industry, the prosperity of the machine tool industry still needs to pick up. Considering that the company's non-operating income in the first three quarters of 2009 was 20.33 million yuan (mainly from government subsidies, VAT tax rebate income and social security return income), accounting for 106% of the total profits, the company's performance is weaker than the overall level of the industry. Profitability needs to be improved.

Product comprehensive gross margin, period expense rate increased compared with the same period last year. The comprehensive gross profit margin of the company's products in the first three quarters was 20.60%, up 1.12 percentage points from the same period last year. The company's expense rate for the three periods was 20.17%, an increase of 3.15 percentage points over the same period last year. We believe that the company's gross profit margin has basically returned to the normal level of 2008. However, as sales are still in the doldrums, the expense rate remains high during the period.

The funds raised are still unused. In July 2009, the company raised funds for a private offering of shares, but so far, the funds have not been used. But at present, the company already has the capital and external conditions for rapid development. In the coming period, the company will use the funds in stages and in batches according to the original plan of raising funds.

Earnings forecasts and ratings. We expect the company's earnings per share in 2009, 2010 and 2011 to be 0.09 yuan, 0.11 yuan and 0.15 yuan respectively. According to the last trading day's closing price of 7.51 yuan, the company's dynamic price-to-earnings ratio in 2009 is 79 times, and we maintain the company's "neutral" investment rating.