Incident: The company released its 2008 three-quarter report today, and the extent of losses has further increased.

Conclusion: Since we expect the price of zinc to maintain a weak consolidation trend, the company's earnings per share in 2008 will be a loss of 0.44 yuan, so the company was given an avoidant investment rating.

Text: In July-September of this year, the company achieved operating income of 1703.4933 million yuan, a year-on-year decrease of 29.60%; in January-September, the company achieved revenue of 5259.827 million yuan, a year-on-year decrease of 28.03%. The net profit realized in July-September was a loss of 993.16,800 yuan, a year-on-year decrease of 315.65%; the net profit for January-September was a loss of 296.1233 million yuan, and earnings per share were -0.27 yuan.

The main reason for the decline in the company's performance was that the price of zinc fell sharply year over year. In the first three quarters of this year, the average sales price of zinc in Shanghai was 17,430.78 yuan/ton, down 36.84% from the average price of 27596.67 last year. Also, since the company does not have its own minerals, its gross margin has always been low. The gross margin for the third quarter of this year was only 4.16%.

We expect the price of zinc to maintain a weak consolidation trend. The company's earnings per share in 2008 will be a loss of 0.44 yuan, so the company was given an avoidant investment rating.