Baomo Co., Ltd. announced its 2011 semi-annual report: The company achieved operating income of 290 million yuan in 2010, a year-on-year increase of 11.34%, a year-on-year increase of 25.58%, a year-on-year increase of 19.90%, a year-on-year decrease of 1.16 percentage points; of these, Q2 revenue was 154 million yuan, up 6.70% year-on-year, 13.02% month-on-month, and net profit (adjusted) of 21.4617 million yuan, up 37.45% year-on-year, 15.57% month-on-month, and comprehensive gross margin of 20.89% The year-on-year increase was 0.88 percentage points, and the month-on-month increase was 2.11 percentage points; in the first half of 2011, earnings per share were 0.22 yuan, of which Q2 was 0.12 yuan, and the performance was in line with our expectations. In the first half of 2011, the sales revenue and profit of the company's polyacrylamide products and cationic polyacrylamide products for oil production were basically the same as the same period last year; revenue from anionic series products, acrylamide products, and surfactants all increased significantly. The comprehensive gross margin of the company's products was 19.90%, down 1.16 percentage points from the same period last year. The main reason is that the price of the main raw material, acrylonitrile, etc. continued to rise this year, resulting in an increase in product costs. Although the sales price of the product also increased accordingly, the increase in the sales price of the product lags behind the increase in the price and cost of raw materials. We believe the company will enter the fast track of development in 2012. 1. With the commissioning of the fund-raising project 10,000 tons of cationic PAM and 10,000 tons of oil-repellent surfactants, the company's production scale will be further expanded; 2. The lagging product price increase and product structure optimization will restore the product gross margin level to a certain extent, and gross margin increased year-on-year and month-on-month in Q2 2011. In terms of market expansion, the company established wholly-owned subsidiaries in Guangdong and Beijing to carry out comprehensive promotion. 1. In the tertiary oil production market, on the basis of further stabilizing the Shengli Oilfield market, the company began large-scale supply in other oilfield markets such as Dagang, Changqing, and Xinjiang; 2. The water treatment market is the most important expansion area and growth point. While providing direct sales services to major customers, the company will further strengthen sales channel construction, optimize the layout, strengthen the technical application capabilities of dealers, and comprehensively enhance market development and service capabilities. As a leader in oil driving technology and products in the domestic tertiary oil production field, the company has extremely broad market development space and prospects in the future. We expect the company's EPS in 2011-2013 to reach 0.50 yuan/share, 0.84 yuan/share, and 0.93 yuan/share, respectively. The compound growth rate for today and next two years will exceed 50%, continuing to give a “gain” rating. Risk warning: The fund-raising project was not put into operation on time, and the price of raw materials fluctuated greatly.