Business performance in the second quarter declined sharply: From a month-on-month perspective, the company's single-quarter operating income fell by about 7.36% in the second quarter, while net profit plummeted by 70.21%. Operating performance can be described as a sharp decline. The company said that due to macro-control and changes in the overall macroeconomic situation, demand in the domestic welding materials market declined in the second quarter, the company's welding material production and sales volume and prices both declined, and product gross profit declined. In addition, preparations for a fall in inventory prices for the second quarter also caused EPS to drop by about 0.05 yuan. Results for the third quarter are expected to pick up, but there is still uncertainty in the fourth quarter: Currently, domestic welding materials market demand is still relatively lackluster, but with the steady rebound in steel prices, the company's performance in the third quarter is likely to rise. However, since the macroeconomic situation at home and abroad in the fourth quarter was not clear, the company's business performance in the fourth quarter was still uncertain. Downgrade earnings forecasts and investment ratings. If there is no major decline in the macroeconomic situation in the future, relying on the commissioning and completion of a series of projects, the company's overall performance in the medium term is still expected to continue to grow. In view of the sharp decline in business performance in the second quarter, we lowered the company's earnings per share for 2010-2012 to 0.52 yuan, 0.75 yuan, and 0.82 yuan, respectively. Currently, the 2010 price-earnings ratio corresponding to the company's stock price is about 34.15 times, which is slightly higher than the valuation level previously set by us at 30 times. As a result, we downgraded the company's rating to “hold.” Furthermore, since the recovery in the company's third-quarter results is a probable event, we believe that there are certain trading opportunities in the company's stock in the short to medium term.