Price of raw material declines; downstream demand maintains rigid.
Stock option incentive plan is gradually carried out, which enhances impetus to operate the company for management.
Extensive expansion is worth of expectation; relatively high dividend rate advances investment value.
We forecast the company’s 2009-2011E EPS to be Rmb0.55, Rmb0.65 and Rmb0.76 respectively, representing P/E ratio of 16x, 14x and 12x. Given its benign development and ability to resist periodic decline as well as the current advantageous valuation, we maintain “Overweight” rating for the counter.