The company's 2012 semi-annual performance forecast drastically lowered the profit forecast. Net profit loss for the first half of the year is expected to be 35-40 million yuan, corresponding to a net profit loss of 2840-33.4 million yuan for the second quarter, a sharp drop from the net profit of 167.6-24.01 million yuan for the second quarter predicted at the end of the first quarter. The lower-than-expected implementation of the ZTE Kangxun Framework Agreement is the main reason for the sharp decline in the company's performance. The company's integrated touch display module mainly relies on the “Supply Framework Agreement” signed with ZTE Kangxun at the beginning of the year, and other customers are in the development period. In the first half of the year, the company's sales revenue for ZTE Kangxun was 163 million yuan, of which sales revenue for the first and second quarters was 0.29 million yuan and 134 million yuan respectively; it actually received 299 million yuan of orders from ZTE Kangxun, which was only 14.7% of the total products covered by the framework agreement. There has been no significant increase in operating income, but there is still a loss in net profit due to lower gross margin and a significant increase in the cost ratio. 1) Early production has not been fully exploited, depreciation and labor costs are amortized large, and product gross margin is still low; 2) The scale effect has not yet been seen, but expenses have continued to increase, including investment in early R&D and trial production to develop new projects for new CTP customers, management platforms and personnel expenses reserved for scale expansion, and increased bank loan interest expenses. The framework agreement signed between the company and ZTE Kangxun in 2012 covered an amount of 1,965 billion yuan. We already anticipated that the actual execution of the ZTE order might fall below the framework, and downgraded the company's rating from the company's previous high stock price to a cautious increase in holdings. Based on the business conditions for the second quarter, we adjusted the company's performance estimates accordingly. The estimated sales revenue of the company in 2012-2014 was 1,521 billion yuan, 1,825 billion yuan, and 2.135 billion yuan respectively; net profit attributable to the owners of the parent company was 121 million yuan, 26 million yuan, and 032 million yuan respectively; corresponding EPS was 0.29 yuan, 0.36 yuan, and 0.44 yuan respectively. The rating was also downgraded to neutral.