Incident: On October 12, Tianlong Optoelectronics disclosed its 2011 three-quarter performance report. The company's profit from January to September 2011 was 80-90 million yuan, an increase of 40-60% over the previous year; the profit for July-September was 20-30 million yuan, an increase of 10-30% over the previous year. Shipments of monocrystalline furnaces are still relatively stable. The industry's production expansion cycle generally lags behind the boom cycle. Although the prices of photovoltaic products have dropped sharply, the shipment volume of photovoltaic equipment is still relatively stable due to the carry-over of orders from last year. It is estimated that the shipment volume for the full year of '11 can reach 600-700 units. As the company's most popular product, the gross margin of monocrystalline furnaces is also relatively stable. The profitability of accessories companies is good. As the photovoltaic industry continues to be sluggish, shipments of equipment products will begin to be delayed, but demand for accessories products is still relatively optimistic. The company newly acquired by the company greatly exceeded expectations. James, a popular company holding 68% of the shares, originally planned to achieve a profit of 30 million for the whole year. In the first half of the year, it has already completed its full-year target. In addition to the holding company's Crucible products, the accessories business will continue to release good results. We believe that the integration of the components that the company has tried around the crystal furnace has achieved remarkable results. There are new developments with new products. Polycrystalline furnace products, which achieved revenue of 20 million in the first half of the year, were also shipped in small quantities in the third quarter, and are expected to achieve a new breakthrough in the fourth quarter. On the LED side, a sapphire crystal growth process is being developed in cooperation with research institutes, and it is expected that the process will be mastered by the end of the year; MOCVD equipment will be prototyped in early 2012, and is expected to become the new darling of localized equipment. The overall supply of the industry is oversupply, and the performance of silicon wafers is not expected. Due to the serious decline in prices of photovoltaic products, the company's fledgling silicon wafer business had low expectations and losses. As the industry is expected to improve in the fourth quarter, the company's business is expected to turn a loss into a profit. Downgraded to “Cautious recommendation”. The company's EPS for 11-13 is expected to be 0.65, 0.91, and 1.21 yuan, respectively, and the closing price on October 11 is 18.11 yuan, corresponding to a price-earnings ratio of 28 times in '11. Given the slowdown in the overall growth rate of the photovoltaic industry, it is given a “prudent recommendation” investment rating. Risk warning. The overall growth rate of the photovoltaic industry has slowed, and the expansion of enterprise production has been delayed.