Shuanghuan Technology announced its 2010 annual report: Achieved operating income of 3.767 billion yuan, an increase of 27% over the previous year, and realized net profit attributable to owners of the parent company of 636 million yuan, an increase of 1394% over the previous year. Achieved earnings of 0.137 yuan per share. There was a significant recovery in the fourth quarter results. The company's net profit for the first 3 quarters was 30 million, and the net profit for the fourth quarter was about 33 million yuan, and the performance rebounded markedly. The main reason is that due to factors such as electricity restrictions and inventory replenishment in the downstream glass industry, soda ash prices rose rapidly in the fourth quarter, rising rapidly from 1,300 yuan/ton to around 2,300 yuan/ton, leading to an increase in gross margin from 16.67% in the third quarter to 20.61%. The cost of coal has risen sharply. Beginning in the fourth quarter of 2010, the price of domestic anthracite has also risen rapidly. The price of anthracite coal in Shanxi has risen from 700 yuan/ton to 850 yuan/ton at present, leading to an increase in the company's ammonia synthesis costs. The company's operating cost in the fourth quarter was 986 million yuan, an increase of 31.7% over the previous month. Capital pressure is high, and operating efficiency is stable. In 2010, the company invested 509 million yuan to acquire minority shareholders' interests in Chongqing Yihua. Capital expenses were large, and the balance ratio increased by 10% to 67.34%. The company's sales expenses increased sharply by 38.72%, and management expenses remained stable. The company's inventory increased by more than 100% to 883 million yuan in 2010, mainly due to rising product prices, salinization processing in Chongqing, and an increase in inventory of 198 million yuan for real estate projects. The sharp increase in inventory led to a decrease of 4.84 in the company's inventory turnover ratio and a slight decline in the total asset turnover ratio. Performance continued to improve in 2011. Driven by the construction of guaranteed housing, demand for soda ash will continue to grow steadily, and industry profits are still in the process of recovering from the bottom. In 2011, the production capacity of the float glass industry increased 15.8% year on year, which is basically in sync with the increase in soda ash production capacity. We judge that the average price of soda ash will rise significantly compared to 2010. The company's real estate project has entered a harvest period. According to the estimate of net profit of 1,000 yuan per square meter, the project can contribute 300 million yuan in net profit over the next 2-3 years. Downgraded to neutral. The company's performance in 2011 and 2012 was lowered by 50%. Regardless of income from real estate projects, the adjusted EPS of Shuanghuan Technology from 2011 to 2013 was 0.17 yuan, 0.28 yuan, and 0.41 yuan. The company's short-term valuation is too high, and the PB valuation is relatively reasonable. The company faced significant cost pressure in the short term and downgraded the company's rating to neutral. Risk warning. Competition in the soda ash industry has intensified, and real estate regulation policies have exceeded expectations.