From January to June 2010, the company achieved operating income of 125 million yuan, a year-on-year decrease of 20.74%; operating profit of 135.972 million yuan, a year-on-year decrease of 87.58%; and realized net profit attributable to owners of the parent company - 124.675 million yuan, a decrease of nearly 7.68 times over the previous year, achieving a basic EPS of -0.06 yuan. There has been a decline in all businesses. The company's main business is wood-based panels and timber, and has 1.82 million mu of woodland and a medium fiber board production line with an annual output of 140,000 cubic meters. During the reporting period, the company's timber business achieved revenue of 26.27 million yuan, a year-on-year decrease of 34.23%, and the wood-based panel business achieved revenue of 83.38 million yuan, a year-on-year decrease of 10.06%; the main reason for the decline in the company's business was from February to June 2010. Due to continued rainfall and serious damage to lumber harvesting walkways, the company's timber production was drastically reduced, and the supply of wood-based panel raw materials was tight, affecting wood-based panel production. Continued rainy weather led to a sharp decline in gross margin. During the reporting period, the company's comprehensive gross margin fell 2.4 percentage points to 15.91% year on year. Among them, the gross margin of wood-based panels rose sharply by 3.9 percentage points to 8.1%, and the gross margin of timber fell 5.3 percentage points to 41.25%. We believe that the decline in the gross margin of the timber business is mainly related to the continuous rainfall from February to June 2010. On the one hand, climatic factors have increased timber harvesting costs, and on the other hand, the sharp decline in production has led to an increase in fixed costs of amortization. Given the special nature that timber can be saved naturally, we believe that the decline in the company's overall gross margin is only a short-term phenomenon. The fee rate for the period increased. During the reporting period, the company's expense ratio for the period increased by 3.8 percentage points to 26.8%; among them, the financial expense ratio was the same as the same period last year. Affected by a sharp decline in revenue, the management expense ratio rose sharply by 6.4 percentage points to 15.3%, while the financial expense ratio decreased slightly by 1.6 percentage points to 8.9%. Future highlights. The company has a medium density fiberboard renovation and expansion project with an annual output of 210,000 cubic meters and a supporting 160,000 mu fast-growing eucalyptus raw material forest base project that is still under construction. However, we value 600,000 mu of collective forest land owned by the company even more. As the reform of the national forestry system progresses, once restrictions on harvesting targets are relaxed, the company's timber business will experience explosive growth. Profit forecasts and investment ratings. Since the gross margin of the company's main business is low, the period expense ratio is too high, and it is difficult to fix the short-term loss situation, we will not predict the company's profit for the time being and maintain a neutral investment rating. Risk warning. 1. There is a risk that the restructuring of the furniture and building materials industry will lead to a decline in demand for the company's products. 2. Risk of large fluctuations in raw material prices.