In the first half of 2010, the company achieved operating income of 638 million yuan, a year-on-year increase of 64.07%; achieved operating profit of 94.4024 million yuan, an increase of 1813.61%; realized net profit attributable to the parent company of 60.4823 million yuan, an increase of 1316.39% over the previous year; and achieved earnings of 0.15 yuan per share. In the second quarter of 2010, the company achieved operating income of 370 million yuan, a year-on-year increase of 67.7% and a month-on-month increase of 46.9%; net profit attributable to the parent company was 25.141,000 yuan, a decrease of 33% year-on-year and a decrease of 16.2% month-on-month. Earnings per share were 0.1 yuan. The volume and price of the company's spandex rose sharply, which contributed to a significant increase in net profit. The company added 10,000 tons of high-tech differentiated spandex and 2,000 tons of warp knitting production capacity. Currently, the company's total production capacity of spandex has reached 35,000 tons. During the reporting period, the company's spandex achieved revenue of 585 million yuan, an increase of 109.89% over the previous year. Affected by the international financial crisis in 2009, the downstream spandex textile and garment industry had poor exports and serious underdevelopment, leading to a contraction in market demand for spandex and a sharp drop in product prices. The first half of 2010 coincided with a high spandex boom. The average price of 40D spandex was 53,760 yuan/ton, an increase of 25.67% compared with 42,780 yuan/ton in the same period last year; during the same period, the price of pure MDI for spandex raw materials increased by only 6.4%, causing the gross margin of spandex to return to the level of 22.62%, an increase of 22.11 percentage points over the previous year. Spandex profits are expected to be sustainable in the second half of the year. At present, the price of spandex continues to stabilize at the level of 51,000 yuan/ton. July-August is the low season for spandex. Under the influence of electricity restrictions in Zhejiang, we expect that spandex will not be weak in the off-season, and prices may drop by a certain margin when the peak season in September approaches. In terms of cost, pure MDI was affected by Yantai Wanhua's additional production capacity of 300,000 tons during the year, and prices are expected to decline in the second half of the year. As a result, we expect the company's gross margin of spandex to remain around 21% during the year. Profit forecasts and ratings. We expect the company's earnings per share in 2010-2012 to be 0.34 yuan, 0.37 yuan, and 0.39 yuan, respectively. Based on the closing price of 9.17 yuan on August 5, the corresponding dynamic price-earnings ratios are 27 times, 25 times, and 23 times, respectively, maintaining the company's “increased holdings” investment rating. Risk warning. (1) Fluctuations in raw material prices; (2) shrinking demand due to falling exports.