Incidents From January to June 2012, the company achieved operating income of 1.87 billion yuan, a year-on-year decline of 1.9%; realized net profit attributable to shareholders of listed companies of 2.028 million yuan, a year-on-year decrease of 83%; and achieved net assets of 1.98 yuan per share. Key investment points The economy declined, and the profitability of the main business declined across the board from January to June 2012. The company's operating income fell 1.9% year on year. Among them, the revenue of dialysis materials, electrical materials, optical materials, barrier materials, and PET slices decreased by 45.7%, 6.9%, 12.5%, 5.5%, and 25.6%, respectively; PVC rolling materials revenue increased 3.1% year on year. Since the reduction in raw material costs was lower than the price reduction for terminal products and the price spread was reduced, the company's gross profit margin and net profit margin each fell 5 percentage points year on year, and net profit fell 83 percent year on year. The BOPET industry expanded in a disorderly manner, and investment income declined sharply. Investment income contributed by participating subsidiary DuPont Hung Kai accounted for more than half of the company's net profit. Due to the disorderly expansion of the BOPET industry and the limited growth rate of downstream demand, the industry fell into a dilemma of price reduction or shutdown in the first half of 2012. The company's product prices fell sharply, profitability declined, and the investment income contributed in the current period was reduced to one-quarter of the same period in 2011. The gross margin of lithium-ion battery separators declined, and the participating subsidiary Jinhui Hi-Tech focused on lithium-ion battery separator production. From January to June 2012, it achieved operating income of 76.575 million yuan and net profit of 307.65 million yuan, a year-on-year decline of 34.81%. The gross profit margin of diaphragms was 46%, a year-on-year decline, but on a par with other comparable companies in the industry. As other companies enter the lithium-ion battery separator field, the gross margin of separators is expected to continue to decline. The reserve project has great potential to increase revenue with the settlement of the company's real estate projects, and the company's revenue and profit are expected to increase dramatically; the lithium-ion battery separator phase II and phase III have basically completed preliminary construction and production commissioning; the polymer smart film project market is huge; the solar backpanel PVDF coating project has already been tested; the company's project reserves are sufficient, and future performance growth points are abundant. Investment advice: It will take time for profits to reverse. The main business of companies that are given a “neutral” rating is significantly affected by the economic cycle, and it will take time for profits to reverse, but the company has sufficient reserve programs, and potential future growth points are plentiful. It is estimated that the company's EPS for 2012, 2013, and 2014 will be 0.09, 0.17, and 0.30 yuan respectively, and corresponding to the latest closing price PE will be 46.5, 23.1, and 13.3 times, respectively, giving it a “neutral” rating for the first time. Risks indicate the risk of large fluctuations in the prices of raw materials and products, and the risk of new product marketing.