In 2011, the company achieved operating income of 11.992 billion yuan, a year-on-year increase of 15.51%; operating profit of 648 million yuan, a year-on-year decrease of 7.89%; net profit attributable to owners of the parent company of 573 million yuan, a year-on-year decrease of 7.16%; and achieved diluted earnings of 0.72 yuan per share. The company's distribution plan for 2011 is to distribute 1 yuan (tax included) for every 10 shares. Looking at the single quarter, the company's revenue for the fourth quarter was 2,538 billion yuan, down 17% year on year, up 9.55%; operating profit was 22.57 million yuan, down 67.77% year on year; net profit attributable to owners of the parent company was 37.25 million yuan, down 60.88% year on year, and EPS for the single quarter was only 0.05 yuan. Revenue growth has declined, and profitability has declined. The company's main business is construction machinery products such as loaders, excavators, forklifts, etc. In 2011, due to the decline in the prosperity of the construction machinery industry, the company's revenue growth rate gradually declined. The annual growth rate was 15.51%, lower than expected; the comprehensive gross margin fell 1.73 percentage points to 15.34%. Among them, sales of complete machines achieved revenue of 8.564 billion yuan, up 6.53% year on year, gross margin of 19.99%, down 0.8 percentage points year on year; parts sales and other realized revenue of 3.168 billion yuan, up 47.81% year on year, and gross margin was 2.95%, down 0.21 percentage points year on year. On the other hand, the rate of expenses for the period rose to 10.52%, and the company's profitability declined. The return on investment enhances the company's performance. In the fourth quarter of 2011, the company's comprehensive gross margin fell to 10.74%. At the same time, the expense ratio for the period rose to 13.58%, which was inverted with gross margin, causing the company's main business to actually lose money. By selling 9.35 million shares of Societe Generale Securities, the company obtained investment income of 100 million yuan, increased the company's net profit by about 85 million yuan, and increased EPS by 0.11 yuan, enabling the company to achieve EPS of 0.05 yuan in the fourth quarter. Since downstream demand in the construction machinery industry has yet to recover significantly, the company's main business is still facing major challenges, and profits and cash flow are under great pressure. The company once again reduced its holdings of Societe Generale Securities by 8.1 million shares in the first quarter, and is expected to increase net profit by 65.7 million yuan in the first quarter. We expect that the company may take the opportunity to continue to reduce its stock holdings appropriately to obtain investment income. The funds raised were lower than planned, and the funding gap has yet to be addressed. The company's private offering was completed a few days ago. Since the increase price of 12.98 yuan/share is much higher than the company's current share price, only the controlling shareholder, Xiamen Haiyi Group, subscribed 19.26 million shares and raised 250 million yuan in capital, accounting for 11.55% of the planned capital raised, which is lower than expected. Due to the company's high demand for working capital, short-term loans increased dramatically, leading to a sharp increase in interest expenses. Financial expenses increased 293.29% year over year, reaching 152 million yuan. In order to guarantee the company's operating needs and continue to push forward the construction of additional projects, the company still has an additional capital requirement of 5.6 billion yuan this year. It is expected that the company will resolve the capital gap through various methods such as self-financing, bank loans, or capital raising. The company's financial costs are expected to increase further, and there is a need for further equity financing. The loader faucet is in a stable position, and the excavator has yet to gain strength. The company is a leading domestic loader company. In 2011, the cumulative sales volume of domestic loaders reached 246,600 units, an increase of 13.85% over the previous year. The company continued to rank third in the industry with sales of 401,000 units. Benefiting from the increase in the scale of infrastructure investment in China during the “12th Five-Year Plan” period and the continuous deepening of the excavator import substitution process, excavators will be the fastest growing construction machinery product. In 2011, China achieved sales volume of 177,600 excavators, up 6.50% year on year. The company's sales volume was 4,253 units, and the growth rate was 33.49%, which is higher than the industry level. After the technical improvement project is completed, the company will develop a production capacity of 15,000 excavators, covering 4t to 50t series crawler hydraulic excavators. The continuous release of excavator production capacity over the next 3 years will be one of the company's main highlights in the future. Profit forecast and investment rating: We believe that the construction machinery industry will show a high growth trend this year. The annual growth rate is about 10%, and the company's annual performance is expected to grow slightly. The company's EPS for 2012-2014 is expected to be 0.81 yuan, 0.97 yuan, and 1.21 yuan, respectively. The price-earnings ratio corresponding to the latest closing price of 9.64 yuan is 12 times, 10 times, and 8 times, respectively, maintaining the “increase” investment rating. Risk warning: macroeconomic fluctuations; market competition intensifies; steel prices fluctuate greatly.