In the first three quarters of 2009, the company achieved operating income of 1,505 billion yuan, a year-on-year decrease of 11.68%; realized net profit attributable to owners of the parent company of 61.51 million yuan, a year-on-year increase of 9.18%; and achieved earnings per share of 0.51 yuan. The year-on-year decline in operating income was mainly due to falling product prices. The company is a leading enterprise in the domestic welding materials industry, and its products are widely used in aerospace, bridges, ships, construction and other national infrastructure construction and major special projects. The main raw material for welding materials is steel, which accounts for about 65% of manufacturing costs, and the price of the company's products fluctuates with the price of steel. Since steel prices in the first three quarters of 2009 fell significantly compared to the same period last year, the company's product prices also declined. Therefore, although the company's capacity utilization rate was as high as 98%, there was no increase in operating income. Product restructuring has increased overall gross margin. The company's consolidated gross margin increased by 1.06 percentage points to 15.71% in the first three quarters. The reason for the increase in gross margin is that the company has increased the development and production of high-end flux-cored welding wires and special electrodes. The gross margin of flux-cored welding wires and special electrodes is much higher than that of ordinary welding wires and electrodes, of which the gross profit of special electrodes can reach 25%. At present, the company's 10,000 ton flux-cored welding wire production line has reached production and sales. Furthermore, the company's “special electrode capacity expansion project” has also entered the production stage, and the share of special electrode production has increased. It is expected that with the adjustment of the product structure, the company's gross margin will gradually increase. “Add 40,000 tons of flux-cored welding wire technology transformation project” will become a new profit growth point. The company raised capital through the issuance of convertible bonds to build a new 40,000-ton flux-cored wire production line. At present, the company has built a 10,000 ton flux-cored wire production line, and will build another 10,000 tons in 2009. By 2011, the project will be completed and production can be achieved. After the completion of the project, the company will have a production capacity of 50,000 tons of flux-cored welding wire, which can achieve revenue of about 600 million yuan and gross profit of more than 100 million yuan. The project will become a new profit growth point for the company. Earnings forecasts and ratings. The company's earnings per share for 2009-2011 are expected to be 0.69 yuan, 0.89 yuan, and 1.07. Based on the closing price of 17.71 yuan on October 26, the corresponding price-earnings ratios are 26 times, 20 times, and 17 times, respectively, maintaining the “increased holdings” rating.