In the first three quarters of 2011, the company achieved operating income of 2.84 billion yuan, an increase of 48%; operating profit of 536 million yuan, an increase of 126%; net profit attributable to owners of the parent company of 480 million yuan, an increase of 134% year on year; and basic earnings per share of 0.78 yuan. The company achieved revenue of 1 billion yuan in the third quarter, an increase of 54% over the previous year. During the reporting period, production and sales of the company's products increased, production and sales of PVC, caustic soda, coal, and cement clinker increased, and the alkali solidification project and coal washing plant were officially put into operation, leading to an increase in revenue. At the same time, the company's share of expenses declined, and profits contributed to the production and sales of coal products increased significantly over the same period last year. The ability to control the cost of PVC products is unparalleled, and product diversification has provided an important guarantee for the company's profit this year. PVC products are the company's main source of profit. Judging from the situation in the first half of the year, PVC products accounted for 35% of the gross profit product. This year, the PVC resin market was sluggish due to factors such as downstream demand and increased supply in the market, and prices also hit new lows. At the same time, the company maintained a high level of profit. At the same time, the company's products were diverse and did not rely excessively on a single product. This is also an important reason why the company maintained a high growth rate in the PVC market this year. Junzheng Chemical is building a calcium carbide production capacity to make up for the 180,000 ton calcium carbide gap. Currently, the company has a production capacity of 260,000 tons of calcium carbide, a current PVC production capacity of 320,000 tons, a self-sufficiency rate of 60% of calcium carbide, and a gap of nearly 180,000 tons. Junzheng Chemical has already started a project to expand the annual output of 300,000 tons of calcium carbide and 200,000 tons of white ash using its own capital. It is expected to be put into operation in the first quarter of 2012. The completion and commissioning of this project will completely fill the gap in existing PVC production, play a positive role in cost control of Junzheng Chemical, and further increase the gross profit margin of PVC products. Highlights: Seize resource advantages, rapidly expand PVC powder production capacity, and lead cost control capabilities. Currently, it has a self-generating capacity of 2.4 billion kilowatts, a self-sufficiency rate of 100%, and a coal self-sufficiency rate of 100%. Calcium carbide will also be fully self-sufficient after Junzheng Chemical's new production capacity is put into operation, and its cost control capacity will be at the forefront of the industry. The company is currently constructing a PVC production capacity of 300,000 tons, raising 400,000 tons of capital, and 600,000 tons in Ordos. Profit forecast and investment rating: The company's earnings per share for 2011-2013 are expected to be 1.176 yuan, 1.781 yuan, and 2,677 yuan, respectively. Based on the closing price on October 24, 2011, the corresponding dynamic price-earnings ratios are 17 times, 11 times, and 7 times, respectively. Maintain an “increase in holdings” investment rating. Risk warning: Caustic soda prices are likely to decline; PVC prices are greatly affected by fluctuations in international crude oil prices and calcium carbide, and it is difficult to reverse the sluggish trend in the short term.