In the first three quarters of 2011, the company achieved operating income of 1.288 billion yuan, an increase of 57.67% over the same period last year, operating profit of 63.08 million yuan, an increase of 24.11% over the same period last year, and net profit of 47.26 million yuan belonging to the owner of the parent company, an increase of 27.59% over the same period last year.

In the third quarter of 2011, the company achieved operating income of 489 million yuan, an increase of 58.52% over the same period last year; operating profit of 18.83 million yuan, down 5.19% from the same period last year; net profit belonging to the owner of the parent company was 15.21 million yuan, an increase of 8.54% over the same period last year; and earnings per share was 0.07 yuan.

In the third quarter, the gross profit margin increased significantly, while the management expenses increased significantly. In the third quarter, the company's comprehensive gross profit margin increased by 2.82 percentage points to 17.73%. We believe that the increase in gross profit margin is related to the change of the bidding method of State Grid to the middle price transaction. The development of R & D activities such as the company's fund-raising projects led to a 3.55% year-on-year increase in management fees to 5.35% in the third quarter.

The company won the order of the real estate company. In the third quarter, the company won the bid Suzhou Sinopec Construction Co., Ltd., Jiangsu Guangsha Real Estate Development Co., Ltd. cable orders totaling 132 million yuan; October 21, the company announced the winning bid Dalian Wanda Commercial Real Estate Co., Ltd. 195 million yuan order.

Profit forecasts and company ratings. We estimate that the company's EPS from 2011 to 2013 will be 0.42,0.48 and 0.66 yuan respectively. Based on the stock closing price of 14.51 yuan on October 21, the corresponding dynamic price-to-earnings ratio is 35 times, 30 times and 22 times, respectively. We downgrade the company's investment rating to "neutral".

Risk hint: due to the financial risk of a substantial increase in accounts receivable, the company's investment project products can not pass the pre-inspection risk and raw material price fluctuation risk.