The company released its 2010 three-quarter report. In January-September, the company achieved operating income of 315 million yuan, an increase of 14.80% over the previous year; realized net profit attributable to the parent company of 6.71 million yuan, an increase of 35.84% over the previous year, and earnings per share of 0.025 yuan. Non-recurrent factors led to a decline in the third quarter results. When the company's operating income increased 25% year on year in the third quarter, net profit fell 27%, mainly due to increased management expenses due to bad debt preparation for accounts receivable and equity incentives. During the reporting period, the court rejected a lawsuit by its subsidiary Huashen Steel to enjoy ownership of the steel components of Taizi Milk Project No. 2, so the company accordingly calculated bad accounts receivable to prepare 6.31 million yuan for bad debts, which led to an increase in asset impairment losses of 5.65 million yuan over the same period last year; however, due to equity incentives, the company's management expenses increased by 5.06 million yuan. In fact, after deducting these two factors, the company's net profit growth rate was as high as 183%. The significant increase in gross profit indicates that the bottleneck in the promotion of ricatin is expected to be broken through. The company's performance growth in the first half of the year was weak. Among them, the sales growth rate of the leading product, ricatin, was only 10.43%, a sharp drop from the same period last year. The reason for this is mainly because the current policy's stringent requirements on the use environment and equipment for high-dose radionuclide therapy have hindered the widespread promotion of ricatin. To this end, the company launched targeted small doses of lycatine in the second half of the year. Since there are few restrictions on the use of small-dose lycatine, it can be promoted in general hospitals, and it has been initially proved that it has obvious curative effects in preventing recurrence and metastasis of liver cancer after surgery, so it has shouldered the heavy responsibility of the company to achieve high growth. Judging from now on, the company achieved gross profit of 46.11 million yuan in the third quarter. Compared with the gross profit levels of 31.95 million yuan and 34.01 million yuan in the first and second quarters, there has been a significant increase in gross profit. Naturally, lycatine, which is the main source of gross profit, has contributed greatly. This indicates that it is entirely possible for small doses of lycatine to break through promotion bottlenecks, and future market prospects are worth looking forward to. The phase IV clinical trial of ricatin is coming to an end, and market recognition is expected to increase. The phase IV clinical trial of lycatine is nearing completion. The report is expected to be released before the end of the year. The clinical efficacy disclosed at that time will determine the exact efficacy of lycatine. Judging from the clinical efficacy of lycatine, there was a steady upward trend in efficacy during phase 2 and 3 clinical trials. This is a positive sign. We believe that with the gradual improvement of medication methods, the effectiveness of phase IV clinical trials is expected to further improve, thus laying the foundation for the subsequent promotion of lycatine. Profit forecasts and investment ratings. The company's targeted additional distribution plan has been approved by the Securities Regulatory Commission, and we expect the company to implement it by the end of this year or the beginning of next year. Regardless of targeted additional distribution, we predict that the company's EPS for 2010-2012 will be 0.07 yuan, 0.27 yuan, and 0.41 yuan, respectively. We believe that with the introduction of small doses of lycatine on the market, lycatine will effectively break through the original promotion bottleneck. Coupled with the launch of new products in the future, explosive growth is expected to be achieved. Many non-recurring factors have determined that the company's performance this year is at a low point. Judging from the stock price, the company's PE in 2011 and 2012 was 52 times and 34 times, respectively, which basically reflects the valuation premium brought about by high growth, so we maintain the company's “increased holdings” investment rating. Currently, the company's stock price is too high, so it is not recommended for short-term investors to intervene; for long-term investors, we believe that the company's superior R&D strength and products will guarantee the company's high long-term growth, and that positions can be strategically established once adjustments are made and deepened. Risk warning: The promotion of small-dose lycatine in small doses is not ideal; prices of leading drugs have been drastically reduced.