The results of the third quarter report are fully in line with expectations. There are still concerns about operations in the fourth quarter, and the “increase in holdings” has been maintained for the time being. The company achieved operating income of 2,627 billion yuan in Q1-3 in '11, a year-on-year increase of 41.1%; net profit (attributable to shareholders of listed companies) was 124 million yuan, an increase of 66.2% over the previous year, or EPS of 0.23 yuan per share, fully in line with our expectations; the net cash flow from operating activities per share was -0.31 yuan. Among them, Q3 achieved sales revenue of 917 million yuan, an increase of 23.2% over the previous year, and net profit of 31.0674 million yuan, an increase of 115.0% over the previous year. The company expects full-year performance growth of 20-50%. Considering that in the context of uncertain macroeconomic conditions, paper sales will be affected by changes in downstream demand, while box board paper will fluctuate more due to factors such as exports, etc., which will all have an impact on the company's sales and profit, we lowered the company's EPS in 11-12 to 0.30 yuan and 0.39 yuan (originally 0.34 yuan and 0.46 yuan). The current stock price (6.18 yuan) corresponding to the dynamic PE of 11-12 is 21 times and 16 times, respectively, maintaining “increased holdings” for the time being. Product price declines increased in the third quarter, and revenue remained flat month-on-month; gross margin declined month-on-month due to the impact of high-priced raw material inventories. The price of box board paper was adjusted in September in line with the decline in raw material prices, and sales volume increased month-on-month due to the gradual release of production capacity in the white-faced cow card project; the price decline increased, and the revenue for the single quarter remained flat at 917 million yuan month-on-month. Product prices fell while raw material prices were still high. The company's Q3 gross margin fell significantly to 12.6% month-on-month (vs 11Q2 14.2%); sales/management expenses increased slightly to 3.8% and 2.1% month-on-month (vs. 11Q2 3.5%/1.9%), and the financial expenses ratio fell to 3.0% month-on-month due to a fixed increase in capital raised; mainly due to the month-on-month decline in gross margin, the company's net profit margin fell from 5.2% in 11Q2 to 3.4% in Q3; 31.0674 million yuan 。 Bills receivable and inventories have increased dramatically, and operating cash flow performance has been poor. During the reporting period, the net cash flow from the company's operating activities was -168 million yuan, or -0.31 yuan per share. The poor operating cash flow performance was mainly due to: 1) notes receivable increased 2.48 times from the beginning of the year to 833 million yuan, which is due to the expansion of the company's sales scale and the increase in the proportion of settlement using bank acceptance drafts; 2) inventory increased 35.4% from the beginning of the year to 595 million yuan. This was due to the company's increase in raw material reserves and production and preparation to meet the expanded sales scale. Preliminary preparations for the fixed increase in household paper projects are being carried out in an orderly manner; investment returns are stable, and the listing of Sharp Ace is worth looking forward to. The company has set an additional fund-raising project of 68,000 tons of recycled household paper. Currently, brand building and channel preparations (special channels and traditional supermarkets) are being carried out in an orderly manner. Sharp Ace and Kangtai Loans, which participated 20% of the company's shares, did well during the reporting period. Together, the two contributed 4.702,700 million yuan in investment income in the Q3 quarter; of these, Sharp Ace's listing application has been officially accepted by the Securities Regulatory Commission, and it is expected that it will continue to contribute significant investment income in the future. Core hypothetical risk: The macro situation is uncertain, and downstream procurement is prudent, which affects the sales volume and price of the company's products.