From January to September 2008, the company achieved main business income of 845 million yuan, an increase of 10.43% over the same period last year; operating profit of 15 million yuan, an increase of 7.89% over the same period last year; net profit belonging to the owner of the parent company was 3.51 million yuan, an increase of 54.59% over the same period last year; and diluted earnings per share was 0.015 yuan. In the third quarter, the company realized a net profit of 2.22 million yuan belonging to the owner of the parent company, down 76% from the previous quarter, and the company lost about 3.09 million in the same period last year.

The company's profits mainly come from acrylamide: the company's main products (and production capacity) include: acrylamide (65000 tons), urea (170000 tons), methanol (50, 000 tons), hydrogen peroxide (25000 tons), silica (15000 tons) and plastic products.

At present, the company's main source of profit is acrylamide products. As the company uses microbial method to prepare acrylamide, the tonnage consumption of raw material acrylonitrile is only 0.77 tons, which has a certain cost advantage compared with other methods. The product did not show normal profitability in the first half of the year, mainly because the snowstorm affected power supply in the first quarter, resulting in low capacity utilization; in the second and third quarters, capacity utilization rebounded significantly with the resumption of power supply.

The parent company lost money in the third quarter, and the profit in the consolidated statement came from acrylamide of the holding subsidiary.

At present, the company is expanding acrylamide production capacity, and the new plant (25000 tons) is expected to be put into production in the second half of 2009. The company's profit growth in 2009 and 10 years mainly comes from the increase in the production and sales of acrylamide.

Other main products with relatively high income and profits include urea and methanol, both of which use coal as raw materials. The price of coal used in chemical industry has continued to rise since the beginning of this year. In the second and third quarters, the number of lump coal manufacturers in Jiangxi was 1000 yuan / ton. We estimate that the production cost of synthetic ammonia and methanol of the company is more than 2500 yuan / ton.

Affected by the recent decline in demand, the prices of urea and methanol have fallen rapidly, and it is expected that the company will be forced to stop production of the two products in the fourth quarter.

Earnings forecast: we expect the company's earnings per share in 2008-10 to be 0.02 yuan, 0.08 yuan and 0.15 yuan respectively, and the corresponding dynamic price-to-earnings ratio is 122 times, 37 times and 20 times respectively. In view of the fact that the company's performance has been in a state of small profit for a long time, the dynamic valuation in 2008 and 2009 is significantly higher than the average level of A shares, so we give the company a "neutral" rating.

Risk hint: affected by demand, the price of acrylamide has fallen sharply, and special tariffs on urea exports have been extended for a long time.