Main points of investment:

The performance exceeded expectations, EPS 0.0968 yuan

In the first quarter of 2011, the company's operating income was 185 million yuan, down 4.52% from the same period last year; the net profit attributed to the owner of the parent company was 36.8157 million yuan, an increase of 448.81% over the same period last year; and earnings per share was 0.0968 yuan, much higher than expected. The main reason why the company's performance exceeded expectations was that during the reporting period, the company transferred 55% of its wholly-owned subsidiary Tianjin Baili Asset Management Co., Ltd. and obtained an investment income of 30.8946 million yuan, which became the main source of the company's profits in the first quarter.

The gross profit margin of the main business has increased, and the profitability of the products has been enhanced.

During the reporting period, the company's main business gross profit margin was 23.88%, an increase of about 5 percentage points over the same period last year. We believe that the main reason is the relatively high gross profit margin level of Baili Sifang's substation automation system, dispatching automation system and other products, thus raising the comprehensive gross profit margin level of the company's main business.

Baili Sifang and Tianjin pump Machinery Group will be the main sources of profit in 2011.

Baili Sifang is mainly engaged in substation automation systems, dispatching automation systems and smart grid related products. After its establishment at the end of 2010, the company achieved more than 200,000 profits, with strong profitability, and is expected to bring hundreds of millions of yuan in revenue to the company in 2011. contribute tens of millions of profits. At the same time, Tianjin pump Machinery Group will be incorporated into the company's statement, which is expected to bring about 20 million of the company's profits every year in the future.

The process of additional issuance is lower than expected, and the superconducting current limiter is expected to contribute to the performance in 2012.

At present, all the project audit, evaluation and related work determined by the additional issuance of the company have been completed, only there are some obstacles in the cooperation of the superconducting current limiter project, and the company is expected to complete the decision-making process of the board of directors in the first half of the year. In addition, it is reported that the 220KV superconducting current limiter will soon be put into operation in Tianjin. We believe that the operating performance of the 220KV superconducting current limiter will accelerate its market promotion, and it is expected that the superconducting current limiter will begin to contribute to the company's performance in 2012.

Profit forecast and investment rating

Regardless of the additional issuance projects, due to the existence of the company's large investment income, we raised the company's EPS in 2011, and the company's EPS in 2011-2012 is expected to be 0.20 yuan and 0.17 yuan respectively. We believe that after the completion of the additional issuance of the company, projects such as superconducting current limiter will form the core competitiveness of the company. In the long run, there is still a lot of room for the company's stock price, which will give the company a strong relevant research report.