From January to June 2010, the company achieved operating income of 421 million yuan, an increase of 9.01% over the previous year; realized operating profit of 5.51 million yuan, an increase of 132.32% over the previous year; total profit of 7.07 million yuan, an increase of 154.67%; and net profit attributable to owners of the parent company was 6.54 million yuan, an increase of 1324.46% over the previous year. Earnings per share for the first half of the year were 0.02 yuan, lower than our previous expectations. Sales volume fell short of expectations, and revenue growth slowed. In the first half of 2010, the company's revenue growth rate slowed significantly compared to the first quarter. The growth rate of sales revenue in the second quarter in a single quarter was only 0.94%, down 25.29 percentage points from the growth rate in the first quarter. The main reason is that product sales fell short of expectations due to real estate regulation in the second quarter. The growth rate of product sales in the first half of the year was only 4.7%. Although the price increased by 3.63 yuan over the same period last year, it was impossible to change the downward trend in sales revenue growth. A significant increase in profitability ensures a high growth in the company's performance. The sharp increase in the company's performance was mainly due to the increase in the company's overall gross margin in the first half of 2010. The company's gross margin for the first half of 2010 was 32.36%, a sharp increase of 30.68 percentage points over the previous year. The increase in the company's gross margin was mainly due to the increase in production at the Shanghai production base, the utilization of production capacity at the Jiangxi production base, and the reduction in fixed costs per unit of product. The start of production of the entire ceramic tile production line did not meet expectations, and improvements were made in the third and fourth quarters. The subsidiary Jiangxi Smick Company has six production lines with a total production capacity of 15 million square meters, but product demand fell short of expectations, resulting in lower sales volume than expected, and product inventory increased significantly. However, according to the seasonality of the company's products, demand in the third and fourth quarters will improve significantly month-on-month. If real estate investment exceeds expectations, there is a possibility that the company's performance will also exceed expectations. The porcelain clay mine and the black ore are expected to enter the survey process one after another and become new profit growth points in the future. The company is actively developing the industrial chain and plans to invest in the development and comprehensive utilization of lithium-containing porcelain ore, while at the same time, the refining of rare metals such as lithium brings new investment income to the company. The project is currently being surveyed and is expected to enter the actual construction phase in 2011. The black talc project is also awaiting investigation. If these projects produce benefits, the company will generate new profit margins. Earnings forecasts and ratings. We lowered the company's profit forecast. The earnings per share for 2010, 2011, and 2012 are expected to be 0.11 yuan, 0.12 yuan, and 0.13 yuan, respectively. Based on the closing price of 10.17 yuan, the corresponding dynamic PE is 96 times, 86 times, and 80 times. Considering that the impact of real estate regulation on the company's product demand will continue and the company's product profitability will continue to improve, the company's “neutral” rating is maintained.