In 2011, the company achieved operating income of 1,233 million yuan, a year-on-year increase of 38.51%; operating profit of 64.34 million yuan, a year-on-year increase of 72.33%; net profit attributable to owners of the parent company of 55.2 million yuan, an increase of 26.40% over the previous year; and achieved basic earnings per share of 0.23 yuan. The consolidated gross profit margin was reduced by expanding the scope of the table, and the cost ratio for the period was well controlled. The company is the only listed company of the Aerospace Science and Technology Group's Sixth Aerospace Institute. The company relies on fluid technology for liquid rocket engines as its core technology. Currently, its main products are pump products, hydraulic transmission products, fluid metering products, and chemical bioengineering equipment. In 2011, the company's operating income increased by 38.51% year on year. Since the new consolidated chemical equipment business accounted for 26.93% of revenue this year, and the gross margin was only 7.50%, the company's overall gross margin fell below 20% for the first time in recent years, to 19.78%. The calculation under the same caliber still increased by 0.61 percentage points. While the scale of operating income is rapidly expanding, the company's period expenses are well controlled, with a period expense ratio of 13.49%. Revenue from pump products has increased dramatically, which is a steady source of growth in performance. Pumps and pump systems are currently the company's main source of revenue and profit, accounting for 30.37% and 40.98% respectively, and gross margin reaching 26.70%. The special pump technology owned by the company has advantages in the high-end fire protection market. It has benefited from investments in affordable housing, water conservancy construction, etc., and has gradually expanded its scale in the military market. On the other hand, developments in fields such as petrochemicals, water conservancy, and hydropower have also brought about a large demand for industrial pumps. While market demand prospects are improving, the company is also continuously improving related pump series products. After successfully achieving rapid growth of 117%, it is expected to maintain a steady growth trend. Chemical equipment revenue and gross margin all fell short of expectations. The chemical equipment business is the main business of Xi'an Aerospace Warwick, which was newly included in the consolidated report in 2011. Revenue was 332 million yuan, accounting for 26.93%, but its gross margin was only 7.50%, which was lower than previous expectations, and also lowered the company's overall gross profit margin. The company is the largest comprehensive engineering company in China whose main business is oxidation reaction and crystallization technology. It has benefited from the rapid growth in domestic demand for biochemical and petrochemical products and strong market demand. It is expected that the chemical equipment business will maintain a compound growth rate of around 30%, and gross margin will gradually increase. Additional development projects help the company explore the automotive hydraulic torque converter market. Currently, the company has the capacity to produce nearly 200,000 torque converters for industrial vehicles and construction machinery per year, and is in a leading position in the domestic industrial vehicle and construction machinery torque converter markets. In order to seize opportunities for the rapid development of automobiles and automatic transmissions in China, the company plans to raise 1 billion yuan in additional capital to invest in the “automobile hydraulic torque converter construction project.” The project has a total investment of 1.1 billion yuan, a construction period of 3 years, and reached the target output in 2015. The production capacity of hydraulic torque converters for automobiles produced under the project reached 1.88 million units, the output value reached 2 billion yuan, and the total profit was about 200 million yuan. Automobile hydraulic torque converters are the key core components of automatic transmissions, and are basically used one-on-one together. According to estimates, the current global demand for hydraulic torque converters is over 30 million units, of which more than 5.5 million are assembled domestically. It is estimated that China's torque converter market demand will be 10 million units by 2015. Automobile hydraulic torque converters have a large demand space, which will enable the new production capacity of additional development projects to be smoothly transformed into new performance growth points for the company. Profit forecasts and ratings. We expect the company's earnings per share for 2012-2014 to be 0.30 yuan, 0.45 yuan, and 0.63 yuan. Based on the latest closing price of 13.27 yuan, the corresponding dynamic price-earnings ratio levels are 44 times, 30 times, and 21 times, respectively, maintaining a “neutral” investment rating. Risk warning: implementation risk of additional projects; risk of downstream demand slowdown; risk of absorption of additional production capacity.