In 2011, the company achieved operating income of 841 million yuan, an increase of 25.34% over the same period last year; operating profit of 118 million yuan, an increase of 22.61% over the same period last year; net profit belonging to the owner of the parent company was 110 million yuan, an increase of 17.80% over the same period last year; and diluted earnings per share was 0.37 yuan.

In 2011, it is proposed to pay a cash dividend of 1.00 yuan (including tax) for every 10 shares.

Revenue fell in the fourth quarter. Affected by the macroeconomic downturn, key downstream supporting areas such as construction machinery and heavy vehicles rapidly evolved from overheating in the first half of the year to overcooling in the second half of the year, and the company's operation was also affected. The revenue in the fourth quarter was 139 million yuan, down 10.72% from the same period last year. From the perspective of different businesses, the sales revenue of bearings was 623 million yuan, an increase of 33.17% over the same period last year, while that of gears and gearboxes was 181 million yuan, an increase of 11.31% over the same period last year.

Gross profit margin rebounded. In 2011, the company's comprehensive gross profit margin was 28.29%, up 0.61 percentage points from the same period last year. Among them, the gross profit margin of bearing products was 33.17%, down 0.3% from the same period last year; the gross profit margin of gears and gearboxes was 11.31%, up 1.43% from the same period last year. The increase in gross profit margin of gears and gearboxes is due to the amortization of fixed costs and the increase in product prices.

During the period, the expense rate increased and the operating net cash flow decreased. In 2011, the company's expense rate during the period was 14.00%, an increase of 0.68 percentage points over the same period last year. Among them, the rate of sales expenses decreased by 0.64 percentage points to 4.20%, mainly because the increase in sales expenses was less than the increase in income; staff salaries and R & D expenses increased sharply, leading to a 1.35 percentage point increase in management expenses to 9.46%. In 2011, the company's operating net cash flow was 18.03 million yuan, down 67.52% from the same period last year.

The company will follow the relevant diversification strategy to reduce the impact of the economic downturn on the company. While fully protecting the core advantage business of plain bearings, we should focus on the development of roller bearings, gears / gearboxes, actively cultivate computerized flat knitting machine and powder metallurgy business, and speed up the development of cross shafts and other projects. strive to expand auto parts business and accelerate transformation and upgrading. Several business development directions of the company in the future are the development direction of the domestic manufacturing and equipment industry, and the prospect of new business is good. The company expects to achieve business income of 1.02 billion yuan and costs of 740 million yuan in 2012.

Earnings forecast: we expect the company's earnings per share from 2012 to 2014 to be 0.44 yuan, 0.55 yuan and 0.66 yuan respectively. Corresponding to the closing price of 8.70 yuan in the previous trading day, the dynamic price-to-earnings ratio was 20 times, 16 times and 13 times respectively. Maintain the company's "neutral" investment rating.

Risk tips: 1) the risk of rising raw material prices; 2) the risk of intensified competition.