The fully diluted EPS of 0.81 yuan fell short of expectations. The company announced the annual report of Gaosong Distribution Market Expectations. In 2010, it achieved operating income of 9.654 billion yuan, an increase of 19.64% over the previous year; realized net profit attributable to shareholders of listed companies of 652 million yuan, an increase of 17.70% over the previous year; and earnings per share after full dilution were 0.81 yuan, lower than our previous expectations. The company's operating income is in line with our previous expectations, and the profit gap is mainly due to the decline in the company's gross margin in the second half of the year. However, with the gradual production of high-margin products at the company's Lingang base, the overall gross margin level will rise somewhat. The company's 10 delivery 10 delivery 10 high delivery plan exceeded market expectations, which also showed management's optimism about subsequent performance. The results of the restructuring are gradually showing. The Tianjin Lingang base is expected to become an engine company that is growing too much. Until downstream, it was mainly steel, metallurgy, and other industries, with large cyclical fluctuations. Around 2008, after industrial restructuring, the share of metallurgic-related products gradually declined. The company's management reviewed the current situation and vigorously expanded into several major fields such as transportation equipment, coal chemical equipment, new energy equipment, and environmental protection equipment. The company's industrial structure is becoming more and more reasonable. The company invested 2 billion yuan to build the Tianjin Lingang base project. It is estimated that revenue after completion in 2011 will reach about 10 billion yuan, which is equivalent to rebuilding one too heavy one. The product is positioned as high-end, mainly final assembly, and is export-oriented. The new base in Tianjin is close to the port, and the loading of large equipment is convenient. We believe that this business is expected to become an engine for the company's future growth. The localization of high-speed train axles will enter the testing stage, and the localization of high-speed rail equipment will welcome major benefits. According to industry news, the Ministry of Railways purchased a set of full-simulation bench equipment for trains with a speed of 350 kilometers per hour from the United States to conduct bench tests on domestic equipment and install it at the Academy of Railway Sciences. We believe this is a major benefit to the localization of domestic high-speed rail equipment. We estimate that Taiyuan Heavy Industries and Boshen Tools are expected to become the first batch of equipment companies to conduct bench tests. Large excavators for mining and excavators with broad future prospects for coal chemical equipment are one of the company's leading products. The market share of large heavy excavators is as high as 90%, and they are widely used in metallurgy, coal mines, petrochemical and other projects. At present, the company has occupied the market for products of 35m and below, and has achieved replacement imports. 55m is now gradually replacing imports. Due to China's unique energy structure of more coal and less oil, China's coal chemical industry is in a stage of rapid development, and the company's business is expected to grow rapidly in the future. We are optimistic about the prospects of the company's transformation and upgrading, and give it a “buy” rating. The target price is 32 yuan. We strongly recommended Taiyuan Heavy Industries many times in our recent reports, and we are optimistic about the huge space brought by its transformation and upgrading. The company's subsequent stock price performance also confirmed our judgment. Based on the company's annual report performance, we adjusted the company's 2011-2012 EPS to 1.10 yuan and 1.60 yuan, and gave it a “buy” rating, with a target price of 32 yuan.