According to the 2009 annual report, the company's annual operating income was 1.082 billion yuan, down 22.04% from the same period last year; operating profit was 34.12 million yuan, down 56.47% from the same period last year; the net profit belonging to the owner of the parent company was 29.99 million yuan, down 53.55% from the same period last year; fully diluted earnings per share was 0.10 yuan; the distribution plan paid 1 yuan (including tax) for every 10 shares.

The decline in sugar production and paper production both led to a sharp drop in income. During the reporting period, the company's performance was basically in line with our expectations. The sharp decline in the company's operating income is mainly due to: 1) affected by the snowstorm in 2008, the output of raw materials and sugarcane in the sugarcane area under the company's jurisdiction has been greatly reduced. During the squeezing season in 2008 09, the company squeezed 606300 tons of sugarcane, a decrease of 40.34% over the same period last year, and produced 73500 tons of sugar, down 39.56% from the same period last year. 2) dragged down by the weak market in the paper industry, the company's paper and pulp production decreased to varying degrees, of which pulp output was 140000 tons, down 9.21% from the same period last year, and paper output was 138200 tons, down 9.74% from the same period last year.

The pulp business is a drag on the company's overall performance. From the perspective of the company's income structure, the proportion of the company's mechanism paper business income is 74.36%, and the proportion of mechanism sugar income is 24.98%. The prosperity of the pulp industry plays a leading role in the impact of the company. As a result, the gross profit margin of the company's pulp business decreased by 5.12 percentage points compared with the same period last year, which not only engulfed the sugar industry due to the rebound in sugar prices, but also led to a 2.1 percentage point year-on-year decline in the overall gross profit margin compared with the same period last year. as a result, the company's operating profit and net profit declined more than operating income. In terms of cost, the overall cost of the company is relatively stable.

The price of sugar may be high in the first place and low in the next. Judging from the trend of sugar prices this year, we still maintain a cautiously optimistic attitude, mainly based on the following reasons: 1) the demand for sugar will depend on the substitution of starch sugar and other sweeteners for sugar, so there is still a possibility that the demand for sugar will decline. 2) the purchase price of sugarcane in Guangxi will be linked in advance, raising the down payment price of sugarcane from 265 yuan / ton to 289 yuan / ton (including the price increase of improved varieties), which will arouse the enthusiasm of farmers to plant sugarcane and lead to the expansion of sugarcane planting area in 2010 and 2011. We expect sugar prices to remain high in the first half of the year, but will decline in the second half of the year. Therefore, we think the company's sugar sales are also likely to be concentrated in the first half of the year. From the perspective of the paper industry, with the continuous recovery of the economy, and the state support for the cultural industry will promote the prosperity of the paper industry, we expect that the company's paper profit margin will pick up this year, and the performance is expected to be repaired.

We expect EPS to be 0.14 yuan and 0.19 yuan in 2010-2011, according to the closing price of 9.78 yuan in the previous trading day, corresponding to dynamic price-to-earnings ratios of 70X and 53X, maintaining a "neutral" rating. Risk tips: 1) the decline in sugar prices; 2) the decline in the price of paper products; 3) market risk.