Performance review: Danhua Technology announced its annual report for the year 12. The company achieved annual revenue of 1,102 billion yuan, an increase of 98% over 2011; net profit attributable to shareholders of the parent company was 0.28 billion yuan, with earnings per share of 0.04 yuan, turning a loss into a profit, but lower than our expectations and that of the market. Fourth-quarter losses were mainly affected by one-off projects. The company lost 95 million yuan in the fourth quarter, mainly due to the misappropriation of funds received by the previous actual controller at the beginning of last year to return 200 million yuan of confirmed income tax expenses of about 50 million yuan. The profitability of the Tongliao Ethylene Glycol Project is gradually showing. The company produces 101,100 tons of ethylene glycol and 49,600 tons of oxalic acid throughout the year, with an average load of 63%; of these, the year-end load is over 85%. The average gross margin of ethylene glycol and oxalic acid reached 15%, of which it reached 20% in the second half of the year, and it already has actual profitability. The company plans to coordinate with the Development and Reform Commission to complete the completion and acceptance of the project as soon as possible. Furthermore, Tongliao Gold and Coal plans to expand the capacity of existing production facilities and increase the production capacity of ethylene glycol by about 100,000 tons this year, thereby greatly increasing the conversion rate of coal and reducing costs. The Henan base will be a highlight in 2013. Among the company's five major projects in Henan, the Xinxiang and Puyang projects have entered the trial production stage. The load has reached 50%, and the light transmission rate has steadily increased; the Anyang project has also completed the entire process. We believe that with the steady progress of the subsequent Henan project, the benefits of ethylene glycol products will gradually become apparent, contributing considerable investment returns to the company. The acetic anhydride project is expected to be divested. The company's acetic anhydride project has now basically been discontinued and included in the scope of the Danyang Municipal Government's relocation. Industrial adjustments will be carried out in the future. We expect the company's project to eventually be divested in 2013. The acetic anhydride project lost 78 million yuan in 2012. After the divestment, the company will go light and focus on projects such as coal-to-ethylene glycol. Valuation and suggestions: We expect the company's 2013-14 profit forecasts to be 0.31 yuan and 0.49 yuan. The current stock price corresponding to 2013-2014 PE is 40x and 25x, respectively. The company's coal-to-ethylene glycol project has achieved a real breakthrough and maintained a “recommended” rating. Risks: 1. Another setback in the test run of the coal-to-ethylene glycol project; 2. The Henan project progressed later than expected; 3. Downward risk in the market valuation center.