Performance is slightly lower than expected: in the first half of the year, the company achieved operating income of 342 million yuan, a year-on-year increase of 56.02%; net profit attributable to the parent company was 43.69 million yuan, an increase of 41.15% year on year; achieved basic earnings per share of 0.16 yuan, an increase of 32.48% year on year, slightly lower than our expectations. The bearing business grew rapidly, and the gear and transmission business rapidly recovered: Thanks to construction machinery and heavy vehicles, as well as the resumption of exports, the company's bearing business showed a situation of strong production and sales. The company's bearing business revenue during the reporting period was 252 million yuan, an increase of 46.44% over the previous year. With the company's development of new customers in the field of gears and transmissions and the recovery of downstream demand, the gear and transmission business revenue was 75.6 million yuan, an increase of 120.46% over the previous year. The comprehensive gross margin declined slightly: in the first half of the year, the company's comprehensive gross margin was 28.6%, down 1.16 percentage points from the previous year. The main reasons were: first, the rise in steel prices, labor costs, and the price reduction of some Yongan Bearing products; second, the revenue share increased by 6% due to the rapid recovery of the gear and transmission business, but the gross margin of this type of product was low, which lowered the comprehensive gross profit margin. The special joint bearing project is progressing smoothly: in 2009, the company decided to invest 236 million yuan to build the special joint bearing project. As of the reporting period, the company has completed an investment of 46.9 million yuan (including about 28.5 million yuan for plant and other infrastructure construction, construction of a three-story plant in the Lantian 1 factory area, and groundbreaking the construction of a new test center in the parent company's Yan'an North Plant; in addition, about 18.4 million yuan was invested to purchase some production equipment, testing equipment and other auxiliary equipment), accounting for about 20% of the total investment. profit. Optimistic about the development prospects of special joint bearing projects: Special joint bearings are widely used in aerospace, new energy, rail transit, steel roof structures, heavy-duty vehicles, etc. In particular, as China's major aircraft projects continue to advance, related supporting products will enter the supplier qualification stage one after another, and the company has always had close business exchanges with China Aviation Industry Group. If the company can pass this supplier qualification certification, it will be beneficial for the company's development in the long term. Profit forecast and valuation: We maintain the company's EPS forecasts of 0.38, 0.57 and 0.76 yuan from 2010 to 2012, as well as a “buy” investment rating. Risk warning: Demand in the mainframe market for construction machinery, heavy vehicles, etc. declined; RMB appreciated.