Recently, we investigated Jinxi Axle Company and had discussions with relevant personnel of the company. Main point of view 1. Judging from the composition of revenue and gross profit, the company's revenue mainly comes from vehicles, axles, and vehicle accessories (wheel pairs, rocker side frames). The vehicle business dominates, and is also the most important reference point for judging the company's future performance, followed by axles, wheel pairs, and rocker side frames. We believe that investment in railway equipment will not increase much next year. The number of truck tenders will be basically the same as this year, the company's performance is stable, and a new round of growth will begin in 2015. 2. The company's vehicle requirements include three aspects: tenders for railway companies, tenders for private cars (previously the railway company was responsible for tendering), and exports; axles and wheel pairs were mainly truck axles; demand included tenders and exports for north-south cars; and rocker side frames were mainly exported. From the analysis of business requirements in various sectors, it is easy to see that railway truck tenders are the core driving force for the company's performance growth. 3. At the end of the 12th Five-Year Plan, the country's railway operating mileage reached 123,000 kilometers. Based on this calculation, the infrastructure investment demand for 2014 and 2015 was 1.5 trillion to 1.8 trillion yuan (currently, there are media reports that railway investment will be reduced; we are more optimistic, especially in infrastructure investment). It is planned that the capital available for fixed asset investment is 1.5 trillion yuan, which is quite tight. 4. The Railway Corporation will increase the scale of debt issuance and increase the scale of infrastructure investment next year, but when capital is relatively tight, priority will be given to guaranteeing infrastructure investment. Next year, equipment investment will be affected, and equipment investment will begin to recover later. Historically, investment in railway equipment also generally lags behind investment in railway infrastructure. 5. Domestic freight volume will remain stable in 2014, and there is little room for growth. This also limits the tendering of railway company trucks to a certain extent. 6. The company's revenue from 2013 to 2015 is estimated to be 2.4 billion yuan, 2.7 billion yuan, and 3.4 billion yuan, respectively, down 12%, up 11.7%, and 27% year-on-year net profit, respectively. Net profit to mother was 79 million yuan, 84 million yuan, and 151 million yuan respectively, down 35.7%, 7% and 79.3% year-on-year, corresponding earnings per share of 0.26 yuan, 0.28 yuan, and 0.5 yuan, PE was 50 times, 46 times, and 26 times. Since China's railway construction is still in a period of rapid growth, the company is rated “recommended”. Risk warning (1) the Railway Corporation's tender fell short of expectations; (2) the railway freight market continues to be sluggish.