Summary of the interim report: In the first half of the year, the company achieved operating income, operating profit, and net profit of 256.67, 94.37, and 47.58 million yuan, respectively, up 2.27%, 6.37%, and 28.28% from the previous year; the gross profit margin and net profit margin were 36.77% and 18.54%, respectively, up 1.42 and 3.80 percentage points from the previous year. The interim report EPS was 0.26 yuan, which was lower than expected. Analysis of the reasons why performance fell short of expectations: Affected by the crisis, the profit level of downstream metallurgical customers declined, the ability of some customers to pay became weaker, and the company's accounts receivable increased by 50.17 million compared to the beginning of the year, an increase of 40%. Due to the company's implementation of a relatively strict sales policy, delivery is delayed if the customer's payment is insufficient, and the corresponding place cannot be confirmed as current revenue, making the interim report performance lower than expected. Currently, downstream profitability has begun to pick up, and we believe that the company's performance in the second half of the year may exceed expectations. Analysis of the main reasons for the increase in gross margin: (1) the share of small reducer revenue with low gross profit fell 17 percentage points year-on-year; (2) the cost of steel was lower. Analysis of the main reasons for the increase in net profit margin: the income tax rate for the same period last year was 25%, but this year, according to high-tech enterprises, a 15% preferential income tax rate was implemented. The interim report shows that the company's key businesses are more prominent: the total revenue of key businesses, modular speed reduction motors, high-power heavy-duty gearboxes, and modular high-precision speed reducers reached 87.75%, an increase of 19 percentage points over the previous year; the share of small speed reducers, motors and accessories in non-key industries has declined further. Fund-raising project progress: The high-power heavy-duty gearbox project was completed and put into operation in August 2009; the modular high-precision reducer project had already generated revenue of 33.42 million yuan in the first half of the year. With the increase in scale, there is still room for growth in gross margin; and the wind power gearbox is in the trial stage. Downstream demand outlook: (1) Although the growth rate of fixed asset investment in the main downstream steel industry is still low, it continues to grow, and profitability is improving; (2) the downstream wind power industry is expected to have an installed capacity of 16 times that of 2008 in 2020. We see continued growth in downstream demand. Profit forecast and investment recommendations: Considering factors such as downstream demand and capacity release, the 2009-2010 EPS is expected to be 0.65, 0.85, and 1.13 yuan, respectively. After the increase, the performance was diluted to 0.50, 0.65, and 0.87 yuan at most, maintaining the target price of 16 yuan, and the “neutral” rating. Risk factors: Downstream concentration in the metallurgical industry. The company will strive to improve applications in industries such as lifting.