Matters: The company and the Shanghai Institute of Nuclear Engineering formally signed the “National Major Science and Technology Development Contract for Large-scale Advanced Pressurized Water Reactor Nuclear Power Plants” to cooperate on the sub-topics of research work on welding materials for nuclear power equipment - development of welding materials for steel safety shells, development of welding materials for main pipes, and technical development of nuclear grade stainless steel welding materials. Main view: Use major national science and technology projects to improve one's own technical level. The restart of nuclear power and the issuance of a series of policies have further raised the technical requirements for nuclear power equipment and materials from a safety perspective. Participation in this major project not only shows the company's technological leadership in special welding materials, but will also be of great significance to the improvement of the company's own research and development level. The contract involved three technology development expenses totaling 11.33 million yuan, which is about four times the company's technology development expenses in the first half of 2012. On the one hand, it forms financial support for the company's technology research and development, and on the other hand, it can hedge management costs. The company's partner, the Shanghai Institute of Nuclear Engineering Design and Research, is at the leading level of nuclear power engineering research and design in China. The company's R&D orientation in meeting its technical standards will greatly improve the technical standards of existing welding materials. The technological achievements will be shared by both parties, not only providing reserves for the company's new technology industrialization, but also laying the foundation for the company to become a potential supplier of nuclear power welding materials in the future and further increase cooperation with nuclear power equipment and engineers. The company has taken a positive step towards the transformation of high-end welding materials. The company's ordinary electrode welding wire products face a declining demand and fierce competition environment, so it is difficult to have room for profit growth; however, for high-end products, due to strong competition from international welding materials companies, it is difficult to significantly improve competitiveness in the short term. However, judging from the high import demand for special welding materials, the future development trend of the industry will still be high-end welding material products. The development of special welding materials for nuclear power will help the company seize opportunities for the localization of nuclear power materials and speed up the replacement of import space. It is an important sign of the company's transformation to the structured upgrading of high-end welding materials. The future focus is on the development of key products such as special welding materials and flux-cored welding wire. At present, the domestic industry's consumption of welding materials is low and the import demand for special welding materials is high, providing development space for high-end welding materials products. The company's domestic special welding materials have obvious advantages in technology, brand and variety. The company is positioned to focus on developing high-end products such as special welding materials and flux-cored welding wire, which will continuously increase profitability and replace imported market share. The company's 20,000 ton flux-cored welding wire project was postponed until December 2013, mainly due to the impact of the short-term market downturn, but it is still the direction of future product upgrades, and the company will benefit from the upgrading of the welding wire industry. Profit forecast. The company's EPS for 12-14 is expected to be 0.25, 0.43, and 0.67, respectively. The current price-earnings ratio corresponding to the stock price is 34x, 19.5x, and 12.5x, respectively. It is recommended to wait for demand recovery and valuation decline.