The company released a performance report for the third quarter. From January to September 2011, the company achieved operating income and net profit of 2,884 million yuan and 127 million yuan respectively, up 6.84% and 21.43% year on year. In January-September, the company achieved basic earnings per share of 0.223 yuan and a return on net assets of 9.85%. Among them, the company achieved operating income and net profit of 977 million yuan and 19 million yuan respectively in the third quarter, up 3% and -67.1% year-on-year. The company achieved basic earnings of 0.03 yuan per share in the third quarter, which fell short of market expectations. The company's performance in the third quarter declined markedly. We believe that this year's tight power supply affected the company's production capacity performance, as well as the impact of factors such as the decline in traditional industrial PET slicing and BOPP markets, and increased competition in the polarizing film market. PET sectioning and BOPET profitability declined. Currently, the company has a PET slicing production capacity of 180,000 tons, and the operating efficiency of the equipment is not high. As the decline in domestic cotton prices had a negative impact on the polyester industry chain, domestic polyester chip profit declined in the 3rd quarter. In the future, the domestic textile industry's peak season will drive demand for polyester chips, and the recent drop in crude oil prices will reduce polyester chip production costs. It is expected that the company's polyester chip profit will recover in the fourth quarter. The high point of BOPET prosperity has passed, and a large number of new production capacity will be put into operation in the second half of 2011. The company's investment income from DuPont Hung Kai is expected to decline. The BOPP market is declining, and competition for polarizing films is intensifying. The company currently has a BOPP production capacity of 60,000 tons, and the equipment is relatively old. Downstream demand for BOPP is weak, and the market season is not strong. The global 3D film market declined in 2011, and in addition to some new companies entering the polarizing film industry, the company's polarizing film sales declined markedly. The second phase of lithium battery separators has entered the trial production stage and will contribute to performance next year. The production capacity of the second phase of the lithium battery separator project being tested by the company is 45 million square meters, which is 3.75 times the company's current production capacity. We expect the gross margin of the company's lithium battery separator to be as high as 60%, and it is expected that the second phase of the project will contribute revenue next year. In the future, some new construction projects will enter the market, such as the 30 million square meter diaphragm production line of Tianjin Donggao Membrane Technology Co., Ltd. recently put into operation, the 15 million square meter project of Yuntianhua is being tested, the 15 million square meter project of Nanyang Technology was put into operation in the first half of 2012, and various proposed construction projects such as 13.2 million square meters in Jiujiu, 20 million square meters in Cangzhou Pearl, and 100 million square meters in Xinxiang Greene. After all lithium battery separator production lines under construction are put into operation, domestic production capacity may reach 600 million square meters, plus 500 million square meters after foreign diaphragm companies expand production, so there is a risk of overcapacity. Considering that China's dependence on lithium battery separator imports is as high as 60%, and there are many difficulties in production processes, formulations, and customer certification, etc., it is expected that the competitive trend of lithium battery separators will not deteriorate significantly in the next one or two years, and profitability will remain at a high level. The company's performance declined in the short term due to factors such as declining market demand for traditional products and fluctuations in the BOPET business cycle; there is a risk of increased competition in the lithium battery separator market in the long term. Without calculating profits from the real estate business, we lowered the company's 2011-2013 EPS to 0.28, 0.39, and 0.50 yuan, corresponding to the closing price of 10.45 yuan, PE by 36.8, 26.5, and 20.9 times. In the future, the company will continue to transform into new energy, new materials, energy saving and environmental protection industries due to the gradual disposal of the company's traditional business, the gradual release of production capacity in the second and third phases of lithium battery separators, and the implementation of DuPont Hongji's 27,000-ton environmentally friendly new energy application BOPET project. Based on comprehensive considerations, we downgraded the company's rating to increase its holdings.