From January to September 2011, the company achieved operating income of 605 million yuan, an increase of 18.7% over the same period last year; operating profit of 98.86 million yuan, an increase of 255.9% over the same period last year; net profit belonging to the owner of the parent company was 68.69 million yuan, down 10.2% from the same period last year; and basic earnings per share was 0.13 yuan.

Revenue grew rapidly in the first three quarters. The company's main business is heating and power generation. From January to September 2011, the company's revenue increased by 18.7% compared with the same period last year, mainly for two reasons: (1) the heating income and cement sales income of the company's holding subsidiary Heizibao Company increased. (2) the company's Sun Company, the Russian far East Investment Co., Ltd., has increased its income from the sale of timber.

Results fell in the first three quarters. In the third quarter of 2011, the gross profit margin of the company's main business decreased by about 3 percentage points to 15.9% compared with the same period last year, mainly due to the rapid increase in operating costs of the holding subsidiary Heizibao. From January to September 2011, the company achieved an investment income of 57.61 million yuan, an increase of 550% over the same period last year (caused by the sale of China Minsheng Banking Corp shares), which is the main reason for the insignificant decline in the company's performance in this period. In the past two years, the company's profits mainly come from non-recurrent gains and losses such as one-time investment income and non-operating income. the unsustainability of non-recurrent profits and losses makes the company's future profits may fluctuate greatly. We believe that non-recurrent income can provide financial support for the expansion of the company's main business, and the sustainable growth of the company's performance in the future needs to rely on the enhancement of the competitiveness of the main business and the rapid expansion of scale. pay attention to the risks and investment opportunities in the transition period of the company's profit structure from investment income to main business profit.

Projects under construction are expected to improve the company's performance. The company seizes the opportunity of accelerating urban construction in Shenyang and actively seeks expansion. At present, there are three central heating projects under construction: the former Majiagou Airport Development Zone, the south of Acheng City and the Harbin Development-Chemical Industry Zone. From the perspective of the company's thermal capacity, the company's three central heating projects, such as Harbin Development and Chemical Zone, will greatly increase the company's thermal capacity after they are put into production. From the perspective of thermal market demand, the central heating market in Shenyang still has a large room for growth. In 2010, the sales area of commercial housing increased by 25%. Coupled with the acceleration of the transformation of shantytowns, thermal demand will support the company's high utilization level of new production capacity in the future, and the company's thermal business is expected to grow rapidly in the future.

Maintain a "neutral" rating: the company's EPS in 2011 and 2012 is expected to be 0.37 yuan and 0.43 yuan respectively, calculated at the closing price of 6.91 yuan on October 24, and the corresponding dynamic PE is 19 times and 16 times respectively. The valuation already includes the impact of non-recurrent profit and loss, taking into account the non-sustainability of non-recurrent profit and loss, the company's valuation is on the high side, and the company's "neutral" investment rating is maintained.

Risk hint: the production process of the central heating project under construction is slower than expected.