The company's performance fell 24.3% year over year. In January-June, the company achieved a total operating income of 4.436 billion yuan, a year-on-year decrease of 8.3%; net profit attributable to shareholders of listed companies was 269 million yuan, a year-on-year decrease of 24.3%, or a combined earnings of 0.17 yuan per share, which was lower than our expectations. The main reason was that sales revenue fell beyond expectations, and the increase in the three expense ratios and asset impairment losses exceeded our expectations. The company's consolidated gross margin level rose slightly year over year, which is rare in the heavy machinery industry. It is difficult for a company to achieve a high increase in sales revenue in the short term. Due to the continued impact of the post-financial crisis, the heavy machinery industry has been greatly affected by macro-control. On the one hand, demand in the downstream market has declined, and on the other hand, the progress of some construction projects has slowed down. We judge that the resulting decline in product prices and delayed revenue confirmation are the main reasons why the company's sales revenue fell more than expected. Among them, the businesses that were relatively affected were forging equipment and crane equipment, and sales revenue fell 57.8% and 8.3% year on year, respectively. The large industrial layout will bear fruit next year. The targeted additional distribution projects completed by the company in the past two years are of great strategic significance to the company's future long-term development. We judge that the three major projects of Tianjin Lingang Base/high-speed rail axle localization/large-scale casting and forging (10,000 ton hydraulic press) will all begin production next year and contribute a certain amount of revenue, and are expected to become the company's new performance growth engine in 2013. At the same time, the company's emerging businesses, which have been vigorously developing in previous years, including mining coking equipment, wind power equipment, and coal chemical equipment, etc., have maintained a steady and long-term trend. The first half of this year increased 15.2/13.7/89.4% year-on-year respectively. We expect these businesses to continue to grow rapidly in the future. risk factors. The risk of macroeconomic fluctuations, the decline in the prosperity of the steel industry exceeded expectations, and the rise in raw material prices exceeded expectations. Downgraded Taiyuan Heavy Industries to “increased holdings” rating: Based on the company's performance in the first half of the year, we lowered its 2011/12/13 EPS forecast to 0.33/0.38/0.48 yuan (originally 0.48/0.56/0.70 yuan). The corresponding PE was 24/21/16 times, respectively. We still have a biased and optimistic judgment on the company's long-term fundamentals, and we believe that the current stock price is basically reasonable, so we downgraded its rating to “increased holdings.”