According to the third quarterly report of 2008, the company's operating income from January to September was 395 million yuan, an increase of 47.83% over the same period last year. The net profit belonging to shareholders of listed companies was 8.4331 million yuan, down 0.89% from the same period last year. Among them, operating income in the third quarter decreased by 0.49% compared with the same period last year; net profit attributed to the parent company increased by 5.25% compared with the same period last year.

The company's operating profit margin fell 1.24 percentage points year-on-year. From January to September 2008, the company's operating profit margin was 3.27%, and from January to September 2007, it was 4.51%, down 1.24 percentage points from the same period last year. The decline in the company's operating profit is due to the following reasons: (1) due to the increase in the cost of raw materials, the gross profit margin of the company's products (clutch) dropped from 21.58% in January-September 2007 to 17.72% in January-September 2008, down 3.85 percentage points from the same period last year; (2) the company strengthened management, greatly reduced the rate of sales expenses and management expenses, and reduced the impact of the sharp decline in gross profit margin.

The income of extensive project management is difficult to meet expectations, and the performance fluctuates greatly. The company raised 59.58 million yuan through a rights issue in 2001, and has used a total of 49.08 million yuan. A total of three projects were invested, namely, Shenyang No. 1 East fourth Ring clutch Project, Changchun No. 1 East New friction material Project and Automobile dual Mass Flywheel Project. These three projects failed to achieve the expected goals due to lack of previous consideration. We are cautious about the hydraulic overturning mechanism project and the technical transformation project of 1.3 million sets of clutches. We believe that the management level of the company is slightly extensive and the performance fluctuates greatly. The company's revenue growth from January to September was mainly due to the increase in production and sales of heavy commercial vehicles. We believe that heavy commercial vehicles will continue to maintain negative growth in the fourth quarter of 2008, so that the company's performance growth will slow down.

The company's full-year net profit attributable to the owner of the parent company is expected to rise by 1.85%. From January to September 2008, generalized heavy trucks (heavy goods and chassis and semi-trailer tractors) sold 477800 vehicles, an increase of 28.52 percent over the same period last year, of which sales of generalized heavy trucks fell 11.13 percent in September from a year earlier. Taking into account the cyclical decline of the heavy truck industry and the relatively weak technical strength of the company, we expect the company's operating income to grow by 6.95% for the whole of 2008; the net profit belonging to the owner of the parent company will increase by 6.55%.

Profit forecasts, investment advice and risks. It is estimated that the EPS of the company in 2008 and 2009 will be 0.063 yuan and 0.047 yuan respectively. Calculated with the closing price of 3.80 yuan on October 24, the dynamic P/E60.44 times and P/B1.88 times in 2008 will maintain a neutral investment rating. The risks of the company are mainly reflected in the market risk, the risk of declining demand caused by the decline in industry growth, the risk of fluctuation in raw material prices, the risk caused by the failure of new projects to meet expectations and macroeconomic risks.