Event: The company released the 2012 annual performance report. The company achieved operating income of 649 million yuan, an increase of 25.2% over the previous year; realized net profit of 81.88 million yuan, an increase of 13.1% over the previous year; and the 2012 EPS was 0.72 yuan, which is fully in line with our expectations. Comment: The performance is fully in line with our expectations. The steady growth of the market and the gradual investment in fund-raising projects have led to an increase in performance. The increase in the company's business performance is mainly due to the steady growth of the market and the gradual investment in the company's fund-raising projects, which have further increased the company's production capacity; at the same time, the company has also further strengthened its market development efforts, and the company's main business revenue has steadily increased. The growth of the company's business mainly depends on Sinopec's layout in the southwest region. Market competition is fierce, and further efforts are needed to develop new markets and enter new regions. In the future, expanding into other markets across the country also requires more business expansion experiments. The new business may become a new breakthrough point. In the future, we will strive to develop into a specialized oil service enterprise and further expand the oil service industry chain. Business specialization and integration has always been the company's development strategy, and in the future, oil service-related business companies will actively pay attention to it. The company will pay close attention to the development of shale gas blocks, and will consider participating in the field of block services as appropriate. Maintain a “Prudent Recommendation” rating. The company is based in the southwest region, and drilling fluid technology services have certain advantages. The major development of the natural gas industry in the southwest region in the future will help the company maintain steady growth. The 2012-2014 EPS is expected to be 0.72 yuan, 0.92 yuan, and 1.06 yuan respectively. According to the latest stock price of 16.37 yuan, the corresponding PE is 23 times, 18 times, and 16 times, respectively, maintaining the “prudent recommendation” rating. Risks indicate the risk that external regions will be difficult to develop; the risk that gross margin will be unstable; and the risk that the balance of accounts receivable will be large.