Net profit in 2009 fell 35% and EPS was 0.24 yuan, in line with expectations of a 26% year-on-year decrease in revenue in 2009, a 35% year-on-year decrease of 35%, EPS 0.24 yuan. Net profit after deducting non-recurring profit and loss was 55 million yuan, a 48% year-on-year decrease, and EPS 0.18 yuan, in line with expectations. The decline in net profit greater than revenue was mainly due to a drop in gross margin from 34% to 29%. There are two reasons for the decline in gross margin: 1) the company hoarded a large amount of high-priced steel at the end of 2008, which led to an increase in costs in 2009; 2) the scale effect of revenue in 2009 decreased, and unit fixed costs increased. Net profit for the 1st quarter of the year rose by 37%, EPS was 0.07 yuan, higher than the forecast for the 10-year 1Q revenue rose 60% year on year, and net profit rose 37% year on year, EPS was 0.07 yuan, higher than expected. Net profit increased less than revenue, mainly due to product price cuts, and gross margin fell from 29% to 27%. Downstream demand has fully recovered, and there is a probability that net profit will rise by 35-40% in 2010. It is expected that demand will fully recover in 10 years, annual revenue will return to 2008 levels, and the year-on-year growth rate will reach 30-35%. High-price steel stocks have all been digested, and the scale effect will increase the comprehensive gross margin to 28-30%. Net profit is expected to grow at a year-on-year rate of 35-40%. The company's financial assets are expected to increase EPS2 yuan. The company holds 30 million shares of Societe Generale Securities, at a cost of 35 million yuan. It is expected to be listed in the second half of '10 or the first half of '11. The market value is expected to reach 600 million yuan, increasing EPS by 2 yuan. The technical improvement project will be put into operation to boost the next two years of high-growth automotive bearing technology transformation projects and special joint bearing technology transformation projects will be put into operation in 2011. Among them, 2.4 million sets of special key bearings will be added every year, which can increase net profit by up to 110 million yuan per year. The net profit growth rate is expected to reach 40-50% in the next 3 years. Maintaining the “Prudent Recommendation” rating We maintain the 10/11 profit forecast: EPS 0.34, 0.50 yuan, corresponding PE is 37X and 25X, and maintain the “Cautious Recommendation” rating.