Investment points the company's operating performance in 2012 will be paid by volume. The company's customer base is relatively stable, the current device is still running at full load, and the products are selling well. At present, the main problem is that the product price is relatively low. But the company's production capacity has increased by about 25% compared with the same period last year, and the increase in sales will to some extent reduce the negative impact of the decline in gross margin on the company's performance.

The new production capacity mainly comes from the Jiaozuo subsidiary project. The project of comprehensive utilization of carbon black and tail gas and processing of carbon black oil implemented by Jiaozuo Longxing, a holding subsidiary (60% equity), is the first step in substantive cooperation after signing a strategic cooperation agreement with China National Chemical and Rubber Corporation. The first phase of 70,000 tons of carbon black production capacity is currently in the commissioning stage, this part of the production capacity will further improve the company's industrial layout.

The silica project enhances the company's profitability. The company has obtained the approval for the construction of six highly dispersed silica production lines with a total scale of 210000 tons per year. The tail gas produced in the production of carbon black is only used for power generation; in order to improve the thermal efficiency of the tail gas of carbon black, the drying gas of white carbon black production makes full use of the tail gas produced in the production of carbon black to realize the efficient utilization of carbon black tail gas resources and achieve the purpose of energy saving and emission reduction. At present, the construction of the first phase of the company's project with an annual output of 35000 tons of highly dispersed silica is progressing smoothly, mainly aimed at the radial tire market.

Give the company an "overweight" rating. We expect the company's EPS in the next three years to be 0.27,0.32,0.47 yuan respectively. Although the macro economy has not yet hit bottom and the market demand for carbon black has not significantly changed, the company, as a leading enterprise in the industry, its production and sales remain stable, and the current stock price has been substantially adjusted, giving the company an "overweight" rating.