According to the 2008 annual report, the company achieved operating income of 2,907 billion yuan, an increase of 5.32% year on year; realized total profit of 203 million yuan, an increase of 60.01% year over year; and realized 144 million yuan attributable to owners of the parent company, an increase of 101.41% over the previous year, and basic earnings per share of 0.30 yuan. The distribution plan allocates 1 yuan for every 10 shares (tax included). According to the 2009 quarterly report, the company achieved operating income of 491 million yuan, a year-on-year decrease of 29.37%; realized operating profit of 11.86 million yuan, profit of 66.57 million yuan in the same period last year; net profit attributable to owners of the parent company - 11.85 million yuan, profit of 49.41 million yuan for the same period last year; and basic earnings per share - 0.02 yuan. Changes in the supply pattern of refined oil products affect the company's gross profit margin. The company is a commercial distribution enterprise whose main business is the purchase and sale of refined oil products. In 2008, the domestic refined oil market changed drastically, and the amplitude between supply and demand was only seen in previous years. Demand rose sharply in the first three quarters, and the domestic supply of refined oil products was tight. In particular, the supply of diesel was seriously insufficient. The company's diesel gross margin in the first half of the year was 6.28 percentage points higher than the previous year. The fourth quarter was affected by the impact of the international financial crisis. Demand in the domestic refined oil market declined sharply. It was in a state of oversupply, and product gross margin declined sharply. The company's consolidated gross margin for the 1st to 4th quarter of 2008 was 12.9%, 15.2%, 11.0% and 9.1%, respectively. There is a clear downward trend in sales volume. The company sold 390,000 tons and 238,000 tons of oil products in the first half of the year and 238,000 tons respectively, a difference of 152,000 tons. The sales volume for the full year of 2008 decreased by 174,700 tons year-on-year. From a national perspective, in the first two months of 2009, gasoline and diesel consumption decreased by 2% and 15% year-on-year respectively. The two major oil groups continued to stimulate consumption of refined oil products through price reduction promotions, but the results were not obvious. It is expected that in 2009, in the face of macroeconomic downturn, a downward trend in refined oil consumption was determined. The company is located in Shandong, and local refineries in the region are well developed. Competition will become more intense when the supply of refined oil products exceeds demand. In the first quarter of 2009, the country lowered the price of refined oil products twice. The company is expected to lose 11.84 million yuan due to the impact of high-priced inventory products. Entering the second quarter, supported by crude oil prices, the country is less likely to lower the price of refined oil products again. As crude oil prices rebound, the price of refined oil products is more likely to rise, and the company's profitability is expected to rise significantly in the second quarter. The market for car gas stations is vast. The company added a new automobile gas station. Due to its reasonable geographical location and obvious competitive advantage, the current operating conditions are good, which is higher than the company's overall gross margin level. Due to the characteristics of natural gas and clean energy, the future market is broad, and the sooner the company develops business, the larger its market share will be in the future. 2009 was the first year of implementing a new price mechanism for refined oil products. The price mechanism is intended to guarantee refining profits and reduce profits in the intermediate sales chain. It is expected that the price difference between the company's refined oil products will decrease and the average gross margin will decline, but the basic domestic demand for refined oil products is still very large, and there are no alternative products with large-scale energy for refined oil products in a short period of time, so the scale of the company's main business operations will be guaranteed. We expect the company's earnings per share for 2009-2010 to be 0.09 yuan and 0.16 yuan respectively, corresponding to the latest stock price of 6.94 yuan. The dynamic price-earnings ratio is 77 times and 43 times, respectively, maintaining a “neutral” investment rating. Risk warning: International crude oil prices have declined again; the country has increased policy support for Shandong Geological Refining.