In 2012, the company achieved operating income of 1,486 billion yuan, a year-on-year increase of 6.41%; operating profit of 5.1218 million yuan, a year-on-year decrease of 94.09%; net profit attributable to owners of the parent company of 3.4739 million yuan, a year-on-year decrease of 93.93%; and basic earnings per share of 0.0150 yuan. The 2012 distribution plan is a cash payment of $0.50 (tax included) for every 10 shares. The company belongs to the building materials industry. Its main business is refractory materials. The main products are glass kiln and cement kiln refractory products. The downturn in the downstream industry caused the company's operating performance to be poor. In 2012, due to macroeconomic influence, the prosperity of the glass, cement, and steel industries all declined sharply. Against the backdrop of recovery beginning in the fourth quarter, the company achieved revenue of 410 million yuan in the fourth quarter, an increase of 15.26% over the previous year, recording the biggest quarterly increase of the year. Overseas business expansion is the company's highlight. The company's overseas business revenue for glass kilns increased 66.65% year-on-year during the reporting period. Profitability declined, and irregular profit and loss helped the company avoid losses. During the reporting period, due to high raw material prices and falling product prices, the company's profitability declined year on year. The comprehensive gross margin for the year was 23.51%, down 2.79 percentage points year on year, and 0.40 percentage points year on year to 26.15% year on year in the fourth quarter. All expenses increased. Among them, the biggest increase in financial expenses was 70.24%, mainly due to an increase in interest expenses due to increased borrowing. The fee rate for the period increased by 3.08 percentage points over the same period to 21.79% over the same period. Achieving non-recurring profit and loss of RMB 26 million helped the company avoid losses in 2012. The company is expanding rapidly and is constrained by the downstream industry, and its performance will be under pressure in the short term. The company is the largest manufacturer of cast refractory materials in China, and the only domestic company equipped with glass kilns and cement kilns to provide a complete supply of kilns. Taking advantage of the company's dominant position in the industry and strong downstream demand, the company developed rapidly in 2011. However, a situation of overcapacity in industries such as glass and cement has formed, making it difficult for the industry to fundamentally improve in the short term, and the company's short-term performance will also be under pressure. Capital operations helped the company enter the steel refractories industry. The company holds 42.99% of Hunan Xianggang Yixing Refractory Co., Ltd.'s shares and 60% of Huadong Ruitai Technology Co., Ltd.'s products are mainly refractory materials for the steel industry, which will help the company rely on the existing production capacity and customer resources of the two companies to quickly enter the steel refractories market, expand the company's downstream demand, and expand the company's business scale. Due to the current boom in the steel industry and the state of full competition in the refractories market, it is expected that it will not contribute much to the company's performance in the short term, and it is expected to become a new profit growth point for the company in the long term. Profit forecasting and investment ratings. The company's EPS for 2013 to 2014 is expected to be 0.07 yuan and 0.22 yuan respectively. Based on recent closing prices, the corresponding dynamic price-earnings ratios are 69 times and 23 times, respectively. Given that the downstream industry sentiment is difficult to fundamentally improve in the short term, the company's performance is expected to recover for a long time, maintaining the company's “neutral” investment rating. Risk warning. Downstream demand mitigates risk; risk that raw material prices will continue to rise.