The 10-year 1H net profit increased by 35% compared with the same period last year, which was 0.43 yuan in line with expectations.

The 10-year 1H income was 320 million, an increase of 33% over the same period last year. After deducting non-recurring profits and losses, the net profit was 51 million yuan, an increase of 35% EPS0.43 yuan over the same period last year, in line with expectations. In the pre-allocation scheme, every 10 shares will be converted to 10 shares with capital reserves and a cash dividend of 1 yuan (including tax) will be distributed.

CNC machine tools grow steadily and contribute greatly to gross profit.

In the main business gross profit, CNC machine tools, which account for 90% of gross profit, increased by 37%; ordinary machine tools, which accounted for a small proportion of gross profit, increased 81% compared with the same period last year, mainly due to a small base in the same period last year.

It is expected to grow by 20% year on year in the first three quarters and 25% year on year for the whole year.

The company is currently full of orders, considering that ordinary machine tool sales have the guiding significance of leading CNC machine tool sales, CNC machine tool sales will continue to recover in the second half of the year. The company's net profit in the first three quarters is expected to reach 93 million, up 20% from the same period last year, and full-year net profit is expected to reach 150 million, up 25% from the same period last year.

Investment projects are progressing smoothly to ensure performance release in 2011

Fund-raising project (8.7478 million shares issued in April 10, with a net raised value of 334 million)-the technical transformation project of large CNC machine tools has been completed by 47% and will be put into production by the end of 2011. Non-fund-raising project-the heavy machine tool processing project with a joint investment of 400 million with Hiszhuangming Co., Ltd. of Germany has been completed by 50% and can be put into production in mid-2011. The non-fund-raising project, the technical transformation project of Hongjiu forging and casting Co., Ltd. to expand the production capacity of large castings, has been completed by 80% and can be put into production this year. The investment project is progressing smoothly and will continue to generate additional revenue for the company since 2011.

10 / 11 EPS1.11, 1.36 yuan, given a "cautious recommendation" rating

We predict that in 10 / 11, EPS1.11 will be 1.36 yuan, corresponding to PE 38X, 33x, and be given a "cautious recommendation" rating.