Events:

The company publishes its 2010 interim report. From January to June, the operating income was 788 million yuan, up 74.06% from the same period last year; the operating profit was 19.9453 million yuan, down 17.74% from the same period last year; the net profit belonging to shareholders of listed companies was 19.669 million yuan, up 14.55% from the same period last year; and earnings per share was 0.102 yuan.

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1. In the first half of the year, the company's operating income increased by 74.06% compared with the same period last year, mainly due to the normal production and sales of the equipment, while the output was too low due to the company's shutdown and overhaul in the same period last year. From a business point of view, the production and marketing of LPG and propylene increased rapidly, with operating income reaching 226 million yuan and 251 million yuan respectively, up 93.28% and 107.92% respectively over the same period last year; and polypropylene and MTBE (methyl tert-butyl ether) income increased by 17.93% and 29.88% respectively.

two。 The decline in gross profit margin and the increase in subsidiary fees are a drag on the company's performance growth. During the reporting period, the company, as a downstream industry, was affected by the sharp rise in crude oil prices over the same period last year. The gross profit margin of the chemical business was only 6.41%, down 5.08% from the same period last year, of which the gross profit margin of MTBE and polypropylene fell 11.33% and 6.65% respectively. In addition, due to the implementation of incentives in the capital and share expansion plan of Chongqing Kangwei, a holding subsidiary, the cost increased by 10.3 million yuan, resulting in a loss of about 8.5 million yuan over the same period last year. Affected by the above factors, the company's operating profit decreased by 17.74% compared with the same period last year. If the influence of Chongqing Kangwei is excluded, the company's net profit in the second quarter is about 17 million yuan, a month-on-month increase.

3. Related party transactions still need to be resolved. In the first half of the year, the company's operating income from related parties (Changling Branch, Yueyang Oil Company, etc.) reached 329 million yuan, accounting for 42% of the operating income.

The amount of raw materials purchased from related parties is as high as 624 million yuan, accounting for 85% of the operating cost.

4. The industrialization of gastropathy vaccine is the main focus in the future. The new national preventive class Ⅰ drug "Oral Recombinant Helicobacter pylori Vaccine" (gastric disease vaccine) developed by Chongqing Kangwei, a subsidiary of the company, for the prevention of gastric disease caused by Helicobacter pylori (gastric disease vaccine) was issued by the State Food and Drug Administration on April 13, 2009. The vaccine is the world's first vaccine for the prevention of stomach disease and has a broad market prospect. In 2010, Chongqing Conway successfully introduced strategic investors to promote the industrialization of the project, which is expected to be put into production by the end of 2012 or 2013. After the completion of industrialization, the average annual sales income of gastropathy vaccine project is 563 million yuan, and the average annual profit is 231 million yuan. According to Yueyang Xingchang's 31.64% shareholding ratio, Chongqing Kangwei can contribute 73 million yuan in annual profits and thicken EPS by 0.38 yuan.

5. The company is expected to achieve EPS of 0.30 yuan and 0.34 yuan respectively in 2010 / 2011. Based on the promising prospect of gastropathy vaccine industrialization project, it is recommended and rated.