Investment points: The company's performance is generally in line with expectations. Although the first quarter results declined slightly compared to the same period last year, this is a normal phenomenon in the company's production and operation. The company's first quarter results account for a low share of the company's annual results. The second and third quarters are the company's main performance periods, and the first quarter results do not affect the company's annual performance growth. The company is continuing with the plan to expand production. The company's additional distribution plan has been approved, and the company will continue to work hard to complete the increase plan, expand hydraulic torque converter production capacity, and develop new profit growth points. The company's hydraulic transmission products will grow rapidly in 2012 as market demand for hydraulic torque converter products increases and the company's production capacity gradually reaches production. It is expected that the company's hydraulic torque converter revenue will expand rapidly in 2012. Sales revenue is expected to reach 350 million yuan, up 200 million yuan year on year from 150 million in 2011. The company will focus on the construction of hydraulic torque converter projects starting in 2012. The company will carry out key projects - automobile hydraulic torque converter construction projects. It plans to build five hydraulic torque converters for passenger cars, one hydraulic torque converter for commercial vehicles, and production lines for core components and related auxiliary facilities, reaching production capacity for automobile torque converters with an output of 1.8 million units per year, and achieving sales revenue of 2 billion yuan. The total capital requirement for the design of the project is 1.1 billion yuan, of which 1 billion yuan is planned to be raised through equity in the capital market, and the company plans to issue an additional 80 million shares. The hydraulic torque converter market has great prospects. The hydraulic torque converter is the core component of AT automatic transmissions. Currently, more than 95% of China's automatic transmissions depend on imports. In 2011, China's automobile production reached about 18.5 million units, including about 13.7 million passenger cars. It is estimated that within the next 5 years, passenger car sales in China will probably reach 20 million units/year, and automatic transmission sales volume can reach 10 million units/year. The company's target market is huge and attractive. Profit forecast and investment recommendations We expect the company's EPS in 2012, 13, and 14 to reach 0.37, 0.58, and 0.68 yuan/share, based on 25 times PE valuation in 2013, with a reasonable value of 14.60 yuan. Recommended rating risk warning: The development process of AT automatic transmissions has unpredictable factors