Key investment points: The third quarter slightly exceeded expectations, and the welding materials industry continued to maintain a high level of prosperity. The company achieved sales revenue and net profit attributable to the parent company of 1,555 billion yuan and 62 million yuan in the first three quarters of 2009, a year-on-year decrease of 11.7% and an increase of 9.2%, equivalent to an EPS of 0.51 yuan, and an EPS of 0.18 yuan in a single quarter, which is comparable to the second quarter and slightly exceeded our expectations. The company's comprehensive gross profit margin was 15.7% in the first three quarters, continuing to rise 0.5 percentage points from the second quarter, reaching the highest level since 2007. On the one hand, it was due to strong demand for welding materials brought about by the rapid growth in fixed asset investment. On the other hand, the increase in high-margin products represented by the company's nuclear welding materials also raised the company's overall gross margin level and enhanced the company's overall profitability. The nuclear island welding materials that won the bid in the early stages have strong barriers to competition, and the company ranks among the world's first-class comprehensive suppliers of nuclear welding materials. Welding materials and welding processes for pressurized equipment in nuclear reactors occupy a very important position in the design, construction and safety assessment of nuclear power plants, and are directly related to the feasibility and safety of nuclear power plant construction. Precisely because of the high requirements for safety, nuclear welding materials have higher entry barriers than ordinary welding materials. Currently, only 4-5 domestic companies, including Atlantic and Shanghai welding materials factories, can supply them. However, at the same time, since there is still a certain gap between the quality and quality of domestic welding materials and foreign welding materials, nuclear island welding materials in core regions such as pressurized water reactors (PWR) and steam generators (SG) are basically dependent on imports, mainly supplied by international giants such as ISA in the US, so there is still huge room for localization. According to rough estimates, domestic enterprises and international enterprises currently supply 1/3 and 2/3 of domestic demand for nuclear welding materials, respectively. The welding material for the third-generation nuclear power AP1000 steel safety shell (SA738B steel plate), which won the Atlantic bid earlier, achieved a breakthrough in the localization of nuclear island welding materials for nuclear power for the first time. It is of great industrial significance, and the company ranks among the world's top comprehensive suppliers of nuclear welding materials. According to our understanding, the gross margin of ordinary nuclear welding materials is 25%-30%, while the gross margin of nuclear island welding materials is expected to be as high as 40%-50%. According to estimates of a total investment of 80-100 billion yuan in nuclear power over the next 10 years, the annual demand for nuclear welding materials is expected to reach 2-4 billion yuan, and the market space is huge. The previous profit forecast is maintained for the time being. There is a high possibility that the full-year performance will exceed expectations. Undervaluations are steady varieties, and the “increase in holdings” rating will be maintained. For the time being, we maintain the company's EPS of 0.68, 0.90, and 1.09 yuan for the period 09-11. The PE corresponding to 09 and 10 years is 26 and 20 times higher. It is still at an undervalued level, and there is still a high probability that the annual performance will exceed expectations. In addition to the company's global competitive advantage in the field of nuclear welding materials, we believe that the company still has broad scope for comprehensive growth in the future, maintain an “increase in holdings” rating, and reaffirm the target price of 20.7-22.5 yuan.