The sales growth rate of the department is lower than the industry average. The company sold 125,041 cars during the reporting period, up 12.28% from the same period last year. Its growth rate is lower than the average of the car industry, indicating that the market appeal of the company's products is limited, and upgrading the product structure is imminent. Gross profit margin declined, and the profit of the division did not improve. In the first half of the year, the company achieved revenue of 4881.51 million yuan, an increase of 11% over the same period last year, and gross margin fell nearly 3%. The company stated that the main reasons for the decline in the profitability of its main business were: (1) the price of raw materials such as steel and rubber increased compared to the same period last year; (2) the economy car market was fiercely competitive, and preferential promotions were offered for some models; and (3) depreciation and amortization increased after the 400,000 engine base project was upgraded. The profitability of the headquarters has not improved. According to quarterly data, the headquarters lost more than 200 million yuan in the first two quarters of this year. Expansion of production capacity and launch of new products. The company is currently constructing Huali's 150,000 vehicle production base and 400,000 transmission capacity enhancement projects to help improve the company's production capacity and product grade. In the second half of 2010, the company will successively launch new models such as the Weizhi V2 sedan, the Xiali A+ model, the 2010 Weizhi model, and the 2011 Xiali N5 model. The introduction of these products is a necessary step to change the aging of existing products. The impact of the Toyota recall was evident in the second quarter. The company's 30% stake in Tianjin FAW-Toyota sold 23,5819 cars in the first half of the year, an increase of about 43% over the previous year, which is comparable to the average performance of the passenger car industry. Net profit of 2,613 billion yuan was realized. The company contributed 719 million yuan in investment income to FAW Xiali in the current period, accounting for 249.8% of the company's net profit during the reporting period. The company's investment income increased by 182.4% in the first half of the year, but the second quarter's investment income was only 300 million yuan, down 29% from the previous month, indicating that the impact of the Toyota recall incident was quite obvious in the second quarter. We determine that with the completion of the recall, FAW-Toyota's profit contribution will return to a high level, and it is estimated that the annual investment income contribution will be around 1.35 billion yuan. Profit forecasting and investment ratings. The company's EPS is estimated to be 0.40 yuan and 0.52 yuan respectively in 2010 and 2011. Maintain a “recommended” investment rating.