In the first half of 2010, the company achieved operating income of 201 million yuan, a year-on-year increase of 9.63%; operating profit of 5.66 million yuan, a year-on-year increase of 178.01%; total profit of 5.65 million yuan, a year-on-year increase of 178.50%; net profit attributable to owners of the parent company: 3.92 million yuan, a decrease of 252.54%; and basic earnings per share of 0.0147 yuan. The company's pharmaceutical business grew significantly, and the company's overall gross margin level increased. During the reporting period, the company's pharmaceutical revenue was 98.5 million yuan, an increase of 40.86% over the previous year, and the gross profit margin was 54.60%, a slight decrease. The company's steel structure business revenue for the same period was 100 million yuan, a year-on-year decrease of 9.75%. The rapid growth of the company's pharmaceutical business has driven the company's overall gross margin level. The company's overall gross margin during the reporting period was 32.79%, an increase of 6.15 percentage points over the previous year. Licatin fell short of expectations, and 37 Tongxu capsules and nasal comfort solution exceeded expectations. During the reporting period, the company's product, ricatin, achieved revenue of 8.4 million yuan, an increase of 10.48% over the previous year, and sales volume of about 325 sticks, which was lower than our expectations. 37 Tongshu Capsule achieved operating income of 42.41 million yuan, an increase of 77.63% over the previous year, and Nasofun Relief Liquid achieved revenue of 24.3 million yuan, an increase of 21.64% over the previous year. Sales of these two products exceeded our expectations. Future highlights. The clinical results of phase IV of licatin are worth looking forward to. Targeted addition will enable the production capacity of ricatin to reach 15,000 sticks per year. Currently, phase four clinical trials of lycatine are being carried out, clinical studies of small-dose lycatine against recurrence and metastasis of liver cancer are being carried out, and administration routes are being expanded. In June of this year, the company issued a private release announcement, and plans to invest 65 million yuan in Huashen biotechnology improvement and expansion projects and in-depth research projects on lycatine. The annual production capacity of lycatine will reach 15,000 sticks. We believe that as the world's first immune-targeted isotope drug used to treat primary liver cancer, lycatine has broad application prospects, and phase IV clinical results are worth looking forward to. Profit forecasts and investment ratings. Based on the total share capital of 269.88 million shares after the transfer, we expect the company's EPS for 2010-2012 to be 0.04 yuan, 0.05 yuan, and 0.09 yuan respectively. Based on the closing price of 14.35 yuan on the previous trading day, the corresponding dynamic price-earnings ratios are 359 times, 287, and 159 times, respectively. Although the future market prospects for Licatin are broad, the market risks faced are high, and the company's current valuation level is high, so we maintain a “neutral” investment rating. Risk warning. The marketing risk of ricatin; the risk of a decrease in the gross margin of the product due to price increases of Chinese herbal medicines; the risk of a decline in revenue from steel structures.