Shuanghuan Technology announced its 2010 semi-annual report. In the first half of the year, the company achieved sales revenue of 1,626 billion yuan, an increase of 9.45% over the previous year; achieved operating profit of 4.866 million, turning a loss into a profit. Achieved net profit of 28.83 million yuan, corresponding to earnings per share of 0.062 yuan/share. Product prices first rise and then fall, and there are cyclical fluctuations. The production and sales volume of Shuanghuan Technology's main products in mid-2010 was basically the same as last year, and the sharp recovery in performance was mainly due to the rise in soda ash prices. In the first quarter of 2010, the price of soda ash remained above 1,300 yuan/ton, with a year-on-year increase of more than 30%. Affected by the country's heavy regulation of the real estate industry in the second quarter, the industry's prosperity declined again. The price of soda ash has generally dropped by about 200 yuan; currently it is only 1,300 yuan/ton. Abnormal weather and frequent natural disasters have affected the demand for chemical fertilizers, and the price of ammonium chloride continues to be low. The main business lost money again in the 2nd quarter. Prices of major products declined, causing the company's gross margin in the second quarter to fall 4% month-on-month to 18.33% in the second quarter. The company's sales are under great pressure, inventories have risen markedly, and the cost ratio for the three categories has also risen markedly over the same period last year. Excluding non-operating income, the company achieved operating profit of 19.08 million yuan in the second quarter, and the main business suffered another loss. Production capacity is overcapacity, and it will take time for the industry to recover. According to our statistics, from 2009 to 2011, 2 to 3 million tons of new production capacity were put into operation every year, and overcapacity suppressed the industry's profit level. Therefore, in the next year, the soda ash industry is still at the stage of digesting production capacity, and there will be no major market conditions. It is recommended to focus on the fourth quarter market. It is estimated that in the second half of the year, about 11 production lines will be completed and put into operation in the flat glass industry, with a daily melting capacity of 6,200 tons/day, corresponding to soda ash demand of about 400,000 tons/year. Inventory pressure on the soda ash industry was high in the third quarter. It is expected that the glass industry's inventory replenishment and the commissioning of additional production lines in the fourth quarter will drive the quarterly increase in soda ash prices. At the same time, we expect that at the end of the 3rd quarter and the beginning of the 4th quarter, the desalination of chemical fertilizer will drive a seasonal increase in domestic fertilizer prices, and the price of ammonium chloride is also expected to follow suit. We lowered Shuanghuan Technology's 2010 EPS from 0.27 yuan to 0.10 yuan, and the 2011 EPS from 0.34 yuan to 0.18 yuan. The current stock price is 69 times PE and 1.73 times PB in 2010. The company's performance is very flexible. The PB valuation is the lowest level in the chemical industry, and there is a margin of safety. It is recommended to pay attention to the market situation that may occur in the fourth quarter.