According to the company's third quarter report, the company's operating income for the first three quarters of 2010 was 684 million yuan, up 1.96% year on year; operating profit was 13.96 million yuan, up 275.30% year on year; total profit was 17.92 million yuan, up 54.20% year on year; net profit attributable to parent company was 17.24 million yuan, up 65.48% year on year; and earnings per share were 0.04 yuan. The decline in sales and gross margin dragged down third-quarter performance growth. The company's revenue for the third quarter of 2010 was 263 million yuan, a year-on-year decrease of 7.57%. The main reason is that market demand is affected by real estate regulation, and sales of ceramic products have declined. At the same time, rising raw material prices led to cost increases. The gross margin for the third quarter was 30.30%, down 0.35 percentage points from the previous year. Decrease in expense ratio and increase in non-operating income performance during the period. The company's period expense rate for the third quarter of 2010 was 27.07%, down 0.27 percentage points from the previous year. Among them, the sales expense ratio was 21.77%, down 2.61 percentage points from the previous year, mainly due to the decline in product sales; the management expense ratio was 3.75%, up 1.64 percentage points from the previous year. The main reason was that stock value-added rights expenses increased by 1.28 million yuan, land use rights and land use tax increased 1.27 million yuan; and the financial expenses ratio was 1.55%, up 0.70 percentage points year on year, mainly due to increased interest on bank loans. Non-operating income for the third quarter was 2.63 million yuan, up 381.43% year on year, mainly from brand rewards and government subsidies. There is a possibility that impairment will revert back to expand the room for growth in performance. In the first three quarters of 2010, the company's asset impairment losses increased by 2.86 million yuan over the same period last year, up 1344% year on year. Mainly, the accrued amount of preparations for the decline in the price of finished product inventories increased by 4.78 million yuan. The company's inventory price reduction preparations reached 10.14 million yuan in the first half of 2010. The company has stepped up efforts to collect accounts receivable. The balance of accounts receivable and the aging structure of accounts receivable are better than at the beginning of the year, reducing the amount of bad debt preparation and accruals by 1.92 million yuan. The impact performance of lithium porcelain clay and black talc ore may be in 2011 or later. The lithium-containing porcelain ore project jointly developed by the company and the People's Government of Yifeng County in Jiangxi Province is currently being investigated, and the exploration work is expected to be completed in December 2010. The People's Government of Guangfeng County in Jiangxi Province has yet to provide a detailed exploration report for the black talc mine. If the cooperation goes well, the two projects are not expected to have a substantial impact on the company's performance until 2011 or later. Earnings forecasts and ratings. We expect the company's earnings per share in 2010, 2011, and 2012 to be 0.11 yuan, 0.13 yuan, and 0.16 yuan respectively. Based on the closing price of 12.38 yuan, the corresponding dynamic PE is 117 times, 94 times, and 76 times, maintaining the company's “neutral” rating. Risk warning: Uncertain risks brought about by real estate regulation.