The incident describes Changjiang Investment's 2013 quarterly report today. During the reporting period, the company achieved operating revenue of 403 million yuan, an increase of 115.98% over the previous year. Operating expenses amounted to 354 million yuan, an increase of 147.8% over the previous year. The company achieved net profit attributable to the company of 12 million yuan in the first quarter, a year-on-year decrease of 4.4%, achieving a basic EPS of 0.0387 yuan, compared to 0.0405 yuan in the same period last year. Incident review The continued expansion of the logistics business is the main reason for revenue growth: judging from the company's recent projects, the contribution to revenue growth in the first quarter was still due to the continuous growth of the logistics business. The volume of the low-margin logistics business has lowered the overall level of gross profit: Looking at the company's business structure and the seasonality of its costs, we believe that the main reason for the rapid decline in the company's gross margin is due to the rapid expansion of the logistics business. As can be seen, the company's engineering project business is characterized by a seasonally low gross margin in the first half of the year. If project settlement increases, gross profit can be lowered. However, from the perspective of improving the structure of the business sector, 1) The reason why the company's gross margin declined by nearly 10 points this year is not due to a sector where the share of business will gradually decrease; it should be mainly due to the drastic expansion of a certain low-margin business. 2) Project settlement generally occurred in the second half of the year, followed by the fact that the absolute amount of engineering settlement business in half a year was low and could not support 100% revenue growth. Therefore, we believe that the business driven by this improvement in the business structure is the logistics business. Three fees remained high, and government subsidies increased performance: overall comparison, the company's median expense ratio has returned to a high level, and has been higher than that of peers for a long time. The company still received around 5 million government subsidies this quarter, receiving a total of 3.585 million yuan in non-recurring profit and loss, increasing its performance by 0.0117 yuan per share. The company achieved net profit attributable to the company in the first quarter of 2013 of 11.89 million yuan, a year-on-year decrease of 4%, achieving a basic EPS of 0.0387 yuan, compared to 0.0405 yuan in the same period last year. The Land Transport Center is expected to continue to improve, and high valuations are an obstacle. Maintaining a “careful recommendation”: after several years of cultivation, the Land Transport Center's business volume last year turned a loss into a profit, and continued to achieve high growth in the first quarter of this year. We believe that the increase in the penetration rate of land transport centers has some inertia. The business is expected to continue to grow in the future, bringing more returns to the company, and the company will also expand its operating results in 2013 and launch a multi-to-multi-city distribution model and 56 cloud platforms. However, the current high growth has certain low base factors, and there is obvious resistance as far as the company's valuation level (40X-50X range) is concerned. We maintain the “Cautious Recommendation” rating and expect the company's EPS to be 0.125, 0.138 and 0.146 yuan for 2013-2015.