Production capacity for white-faced beef cards was gradually released, driving a sharp increase in performance; increasing household paper was fixed to calm fluctuations in the business climate and maintain “increase in holdings.” 1) The company's original boxboard business has gradually released production capacity in the short term due to the gradual release of white kraft paper production capacity in the previous round; it has benefited from increased industry concentration and increased bargaining power in the long term; 2) Fixed investment into the 68,000 ton recycled household paper project to open up a blue ocean of competition in the paper industry and enhance future profits, while its consumption attributes can also calm the company's sentiment fluctuations; 3) Shap Ace, a shareholder, has entered the listing consultation period and is expected to contribute a lot of investment income in the future. Based on the company's cost control situation being better than our previous expectations, the company's 11-12 profit forecast was raised to 0.34 yuan and 0.46 yuan (previously 0.32 yuan and 0.42 yuan). The current stock price (6.99 yuan) corresponds to 11-12 PE by 21 times and 15 times, respectively, maintaining the “increase in holdings” rating. The interim results were fully in line with expectations. The company's 11H1 achieved sales revenue of 1.71 billion yuan, an increase of 53.1% year on year; achieved net profit of 93.186 million yuan, up 54.6% year on year; combined earnings of 0.17 yuan per share (calculated based on the latest share capital of 547 million shares), which fully met our expectations; net cash flow from operating activities per share was -0.34 yuan. Among them, Q2 achieved sales revenue of 917 million yuan, an increase of 58.0% year on year, and realized net profit of 48.1 million yuan, an increase of 77.0% year on year. Production capacity for new projects is gradually being released, driving a significant increase in revenue. The company's previous fund-raising project, 250,000 tons of high-grade white beef cards, was put into operation in October 10. 11H1 sales increased sharply year on year, driving white noodle cow card revenue up 318.2% year on year; at the same time, the prices of various products were driven by the price of raw materials, especially waste paper, which led to a sharp increase of 53.1% in revenue in the first half of the year. The ability to raise prices was limited, and the company's gross margin declined year on year. Because the downstream packaging industry is sensitive to raw material prices, the company's ability to raise prices is limited. In the first half of the year, the gross margin of kraft box board (accounting for 62.6% of revenue) fell 3.5 percentage points to 15.0% year on year against the backdrop of high raw material prices. Since production capacity is still being gradually released, white kraft paper (accounting for 12.4% of revenue), depreciation of tons of paper is high, and gross margin fell 4.2 percentage points to 12.1% year on year. Other paper (accounting for 5.9% of revenue) reduced production costs due to the company's reuse of part of the paper sludge. At the same time, it also produced high-margin small-batch products customized by some customers. The gross margin increased 17.9 percentage points to 37.6% over the same period last year. Overall, the company's comprehensive gross margin was still down 1.2 percentage points year on year to 15.2%. Participate in Shap Ace to contribute to the return on investment. The company has a 20% stake in ShapeAce, a comprehensive pharmaceutical company specializing in drug research, development, production and operation. Its main products include the new anti-cataract drug “Sharp Ace” eye drops and the new anti-glaucoma drug “Daliang” eye drops. During the reporting period, ShapeS' operating conditions were good, achieving sales revenue of 192 million yuan, net profit of 32.4282 million yuan, H1 contributed investment income of 6.485,600 yuan (the company had a significant influence on it, using equity method accounting), and Kangtai Loan, in which the company participated in shares, contributed 1,516,300 yuan to the investment, driving a significant increase in the company's investment income. Sharp Ace entered the listing consultation period on October 21, '10, and was officially accepted by the Securities Regulatory Commission on June 3, '11. It is expected that it will continue to contribute a lot of investment income in the future. Expense control was effective, and net interest rates remained flat year over year. The company's expense ratio control during the period was very effective. The 1H1 sales expense ratio, management fee ratio, and financial expense ratio decreased by 0.5/1.0/0.7 percentage points year on year, so despite facing a decline in gross margin, the company's 11H1 net interest rate remained flat at 5.4% year on year, making the company's net profit growth rate in the first half of the year basically the same as revenue growth rate, which was 54.6%. The scale of production has expanded, procurement of raw materials has been increased, and operating cash flow performance is being dragged down. During the reporting period, the company's operating cash flow decreased by 181.0% year on year to -186 million yuan (-0.34 yuan per share) due to increased procurement of raw materials and a significant increase in raw material prices. Fixed-increase projects are invested in the household paper sector, and differentiated competition increases profits and calms cycle fluctuations. The company issued 155 million shares in June '11, raised a net capital of 931 million yuan, and invested in the 68,000 ton recycled tissue project. For details, see the 11/06/09 in-depth report “Jingxing Paper - Fixed Growth Household Paper: A New Engine for Performance Growth, Calming Business Cycle Fluctuations, and Upgrading to Increased Holdings”. During the reporting period, according to the characteristics of household paper FMCG products, the company focused on strengthening brand building, market preparation, etc., increasing the market popularity of the “Pinxuan” brand and promoting the concept of environmental protection. The risk of the core hypothesis: the price of raw waste paper fluctuates greatly, and the decline in exports affects the domestic price of boxboard paper.