The company released the third quarter results forecast. The profit for the third quarter was 19.1402 million yuan to 24.363 million yuan, with a year-on-year increase of 10% to 40%. Expenses for a comprehensive tender offer have lowered profits, and normal profit growth should be 35%-65%. The company carried out a comprehensive tender acquisition of Australian listed company KRS (Cresta) in the third quarter of this year. The implementing entity was San Tego (Hong Kong) Trading Co., Ltd., a wholly-owned subsidiary of the company. The merger and acquisition included cost expenses for the third quarter (various intermediary fees, financing interest, etc.) of about 4.3 million yuan, which had a negative effect on net profit in the third quarter. If the influence of these factors is not taken into account, the company's three-quarter performance should have increased by 35%-65% year on year. After the KRS acquisition is completed, it will depend on the results of the integration, and we are optimistic that it will be completed. One of the main reasons we highly recommend the company is because we are optimistic about the synergies that will occur after the KRS acquisition is completed. Although the overall performance of KRS before the acquisition was worrying, many buyers viewed the historical perspective of overseas acquisitions by domestic companies — the integration of domestic companies after the acquisition of overseas mergers and acquisitions was not very optimistic, believing that the company's integration of KRS might also be difficult. We have studied financial data related to KRS, and we believe that this year's KRS data should not improve significantly (corresponding to the first half of KRS's new fiscal year), but in the future, with adjustments in the company's management and changes in related business strategies, the company's fundamentals are expected to improve to a certain extent, while at the same time having a synergistic effect on Pioneer New Materials itself. We are still quite optimistic about the future of KRS. Maintain a “buy” investment rating. Without considering the KRS merger, we expect the company's 2014-2016 EPS to be 0.21 yuan, 0.27 yuan, and 0.32 yuan. We believe that the company's current stock price is at an underestimated level, maintaining a “buy” investment rating. Risk warning. The risk of external shading falling short of expectations, the risk of KRS consolidation falling short of expectations after being acquired, and the risk of a downturn in the stock market.