Investment advice We expect the company to have profits of -0.23 yuan (down 174.5%) and -0.13 yuan (down 126.7%) in 2013-14, downgrading the rating to “neutral”. Reason: The company achieved operating income of 474 million yuan in the first three quarters, a year-on-year decrease of 37.41%; net profit attributable to shareholders of the parent company - 158 million yuan, and earnings per share - 0.20 yuan, lower than our expectations. Although demand in the ethylene glycol industry is still strong and prices remain high, the sharp increase in the fixed costs of gold coal in Tongliao will affect the profitability of ethylene glycol at this stage. Meanwhile, the headquarters's compensation plan for the relocation of acetic anhydride in Danyang continues to advance, all of which have affected the current profitability of the company. Profit forecast and valuation The company's production facilities operated steadily in the third quarter, producing 32,900 tons of ethylene glycol and 10,300 tons of oxalic acid in a single quarter, with a production load of over 70%. Quarterly revenue for the third quarter was 236 million yuan, a sharp increase of 60.76% over the previous month, while gross margin increased to 22.57%. Since technical bottlenecks such as the UV transmittance of the company's products were broken through at the end of November 2012, equipment operation conditions have become the main factor affecting production load. In the first half of the year, the company stopped production and maintenance three times, and the equipment operated steadily in the third quarter. Production has resumed for 10 days in preparation for winter in October. Currently, it seems that after continuous investigation and correction of gaps, the stability of the equipment is improving. Tongliao Gold Coal plans to invest 300 million yuan to expand the capacity of existing installations and increase the production capacity of ethylene glycol by about 100,000 tons. This transformation is expected to be postponed until next year. After the transformation is completed, the fixed costs of current production will be greatly reduced, and product profitability will be increased. The company is currently making every effort to carry out the completion and acceptance of the first phase of the project and the relocation of the acetic anhydride plant in Danyang headquarters. In the future, as production technology matures and equipment stabilizes, the company's profit may pick up. Risk 1. The test run of the coal-to-ethylene glycol project faces another setback; 2. The progress of the Henan project is lagging behind expectations; 3. Downward risk of the market valuation center