Performance has maintained steady growth, and cost pressure is rising. In the first half of 2011, the company achieved operating income of 290 million yuan, an increase of 11.34% over the previous year; realized net profit attributable to shareholders of the parent company of 40 million yuan, an increase of 25.58% over the previous year; and achieved EPS (diluted) of 0.22 yuan per share. The performance was in line with our expectations. The comprehensive gross margin of the company's products was 19.g%, down 1.16 percentage points from the same period last year, mainly due to rising prices of raw materials such as acrylonitrile, which led to an increase in product costs. Accounts receivable increased significantly, and the risk of customer default was small. Revenue from Sinopec accounts for more than 2/3 of the company's total revenue. The payment for the goods sold by the company to Sinopec is settled separately by the company and each specific user unit under Sinopec. The payment period is generally within 3 months, with rolling payments. In the reporting period, the company's accounts receivable increased by 53.58% compared to the beginning of the year, mainly because Sinopec was completing settlement procedures for some contracts in the first half of the year and the company's increased social market development. Due to Party A's high reputation, the company's accounts receivable are less likely to go bad. The development of a new market for tertiary oil production may now fluctuate in pulse mode. The main demand for polymer usage in the country's tertiary oil production comes from Daqing Oilfield and Shengli Oilfield, which together account for more than 80%. On an incremental basis, domestic oil fields such as Changqing, Tuha, and Tarim still have room to use polyacrylamide as a three-mining method. However, to enter the third oil production cycle, the moisture content needs to reach a certain level, and it takes a certain amount of time to arrange the types and amounts of polymers used in the third oil production cycle, so demand in the new market will show a pulse increase within a certain period of time. Major customer strategy+new product development are expected to help future growth. According to industry trends and the company's current strategy, it is expected that in the future, the company may invest in offshore oil fields, high temperature resistant salt resistant products, and PAM development suitable for mining operations. On the other hand, starting from the traditional oilfield business, it is expected that in the process of developing water treatment and other businesses, the company is expected to continue to adhere to the strategy of major customers. By forming a professional service team for water treatment, direct sales and service for major customers will be carried out, with integrated service as the ultimate goal. Risk factors: risk of oil field and water promotion falling short of expectations; risk of a rapid rise in raw material prices in the short term. Profit forecast, valuation and investment rating: We kept the company's 2011-2013 EPS forecast of 0.53/0.66/0.73 yuan unchanged. The corresponding price-earnings ratio for 2011/2012/2013 was 32/26/24, respectively, maintaining the “increase in holdings” rating.