The company achieved operating income of 1,397 billion yuan in 2011, up 65.32% year on year, and achieved net profit attributable to the parent company of 57.2586 million yuan and EPS 0.50 yuan. At the same time, in the first quarter of 2012, the company achieved operating income of 337 million yuan, an increase of 5.75% year on year, and net profit attributable to the parent company of 9.024 million yuan, a year-on-year decrease of 29.19% and EPS 0.08 yuan, which is lower than expected. The lower performance was mainly due to the glass kiln refractory sector (accounting for 49% of last year's revenue). Affected by real estate regulation (real estate accounts for about 70% of the demand in the glass industry), the flat glass market price fell rapidly in the second half of last year and accelerated to near variable costs in the fourth quarter and is still low. As a result, glass companies' new construction and cold repair lines have drastically slowed or even stagnated. The year-on-year growth rate of revenue in Q4 2011 and Q1 of 2012 fell by 45.79 and 27.55 percentage points, respectively. In terms of the ratio of finished products produced in inventory to operating costs, it was 0.31 at the end of 2011, exceeding 0.24 at the end of 2008. The cement kiln refractory business has maintained a rapid growth trend: We estimate that since the company launched the cement kiln refractory business in 2009, the revenue growth rates of this business (heat-resistant and wear-resistant materials are classified into the cement kiln refractory sector) were 162.49% and 127.65% respectively. We judge that the company's current share of the cement kiln refractories market is only about 3%. In the next two years, due to the release of new building+acquisition capacity, the high growth trend in this business sector can still be maintained. Due to the price increase of the main raw materials zircon sand, alumina, magnesia and bauxite, the company's comprehensive gross margin decreased by 0.82 percentage points year on year in 2011, and the comprehensive gross margin increased slightly by 0.78 percentage points year on year in Q1 in 2012, mainly due to changes in product structure. The cost ratio for the period increased 1.04 percentage points to 18.71% in 2011, and increased 2.96 percentage points to 20.79% in Q1 in 2012, mainly due to sales expenses (increase in labor and freight costs) and financial expenses (increase in loan interest rates, issuance of 150 million yuan corporate bonds). In April of this year, the company acquired Xianggang Yixing Refractory and established Huadong Ruitai to expand the market to the steel industry. Although the boom in the glass industry is still difficult to reverse in the first half of this year, we are still optimistic about the rapid growth brought about by the company's development in the cement and steel fields. We expect net profit attributable to the parent company in 2012-2013 to be 0.79 and 114 million yuan, and EPS is 0.68 and 0.99 yuan respectively. Considering the high performance growth brought about by the company's entry into the field of refractory materials used in cement kilns, we believe that the current valuation is undervalued and maintains a “buy” rating. Risk warning: Market expansion fell short of expectations, and raw material prices rose above expectations.