Incident: Zhongqingbao (300053) released its 2010 three-quarter report. The announcement shows that in the first three quarters of 2010, the company achieved operating income of 52.2641 million yuan, a slight decrease of 2.1%; net profit of 29.16 million yuan, an increase of 4.63% over the previous year; and basic earnings per share of 0.23 yuan. Comment: The game did not go well, and the performance fell short of expectations. The company's revenue for the first three quarters was 52.2641 million yuan, a slight decrease of 2.1% over the previous year; the development and promotion of new games increased sales expenses and management expenses by 11.5% and 31.6% respectively. The lack of success between old and new games is the main reason why their performance falls short of expectations. Of the three new games introduced by the company this year, only one game can contribute part of the revenue, while the other two are still in the testing phase; while the three old games have basically entered a period of decline. The performance of web games exceeded expectations, but the revenue share was relatively low, which could not fill the gap brought about by the decline in major games. In 2011, new games were launched centrally, and performance improved. According to our research, starting in the fourth quarter, the company will complete testing of all three new games one after another to provide revenue. In terms of new product development, the company will continue to launch more than 4 new games (the company will launch 8-10 new games in 2011). We believe that the third quarter of 2010 was already a low point in the company's performance, and there will be a rebound in the future. The “Treasure Collection” program is beginning to bear fruit, and it is hoped that it will be on the front line. The online game industry has the characteristic of “eating fresh food all over the world”, yet none of the company's current games are “boutique” games. The company launched the “Treasure Project” to recruit middle and senior developers and managers in the industry to make up for the company's own talent weaknesses. The company has invested in a number of online game companies, including “Rhino Technology,” “Leledang Technology,” and “Top Network,” laying the foundation for building quality games. Once a boutique game is launched, the company will achieve a leap from a second-tier online game company to a first-tier online game company. Maintain the “careful recommendation” rating, and the reasonable price is 25.0-29.0 yuan. Due to the delay in the launch of the new game, the company's profit forecast was lowered. Earnings per share for 2010-2012 are expected to be 0.35 yuan, 0.45, and 0.64 yuan. The current price-earnings ratio of the stock price is 60, 47, and 33 times, respectively, which basically reflects the company's current business situation. The company maintains a “careful recommendation” rating given the R&D effort invested in new games and the explosive power that new games can bring.