The net profit growth rate in 2011 was lower than expected, and EPS was 0.74 yuan. In 2011, the company achieved operating income of 11.99 billion yuan, an increase of 15.5% over the previous year, and achieved net profit belonging to the parent company of 573 million yuan, a year-on-year decrease of 7.16%. The corresponding earnings per share were 0.74 yuan. The company's net profit fell far below our expectations. The 2011 distribution plan allocates 1.00 yuan in cash for every 10 shares. Fourth-quarter revenue and net profit both fell 17% and 66%, contributing more than 80% of the full year's results in the first half of the year. The company's revenue and net profit for the fourth quarter of '11 were 2.54 billion yuan and 37.25 million yuan respectively, down 17% and 66% year-on-year. The revenue growth rates for the single quarter were 101.6%, 10.9%, 1.2%, and -17.4%, respectively, and the net profit growth rates were 84.7%, -19.9%, -29.9%, and -66.0%, respectively, all showing a trend of slowing down from quarter to quarter. Net profit accounts for 43.8%, 37.3%, 12.4%, and 6.5% respectively in a single quarter, laying a solid foundation for performance growth in the first half of the year. The sales growth rate of the company's loader and excavator business was “high and low”, and the revenue from the whole machine business increased by only 6.53%. In order to control inflation, domestic macro-control policies have been tightened, leading to a decline in the growth rate of downstream investment. According to the Association's statistics, sales in the loader and excavator industry increased by 19.07% and 32% in the first half of the year, and only increased by 7.8% and decreased by 27.6% in the second half of the year; they increased by 13.96% and 6.9% respectively throughout the year. The company sold 40,000 units of loaders and 4,253 units respectively, up 16.7% and 51.8% respectively. Due to its low base and aggressive sales strategy, the company's excavator growth rate far exceeded the industry average, and its market share increased 0.7 percentage points to 2.4% compared to 2010. The company's machine business revenue was 8.56 billion yuan, an increase of 6.53% over the previous year. Profitability fell 1.4 percentage points, and gross margin levels are expected to drop slightly this year. In 2011, the company's comprehensive gross margin was 15.34%, down 1.4 percentage points from 2010. On the one hand, the gross margin of the machine business fell 0.8 percentage points to 19.99% year on year due to rising prices of raw materials such as steel and tires; on the other hand, the growth rate of the parts business exceeded the growth rate of machine revenue, and the share of the parts business rose to 27%, while its gross margin was only 2.9%. The company's share of excavator sales will decline somewhat in 2012, and gross margin is expected to decline further slightly. Aggressive credit sales are putting pressure on the company's cash flow. Credit sales strategies are widely used in the construction machinery industry, and the company has also stepped up marketing efforts for credit sales. The revenue of Xiamen Haiyi Financial Leasing Co., Ltd., which has a 35% share, increased sharply by 113% in 2011. Dealers applied for financial leasing payments of 183 million yuan through Xiamen Haiyi Company, an increase of 64.8% over the previous year. Meanwhile, the promotion resulted in the company's accounts receivable balance of 3.29 billion yuan, an increase of 87.4% over the beginning of the year. The company's net operating cash flow for 11 years was -1,311 million yuan, and operating cash flow in 2010 was 448 million yuan. The company's cash flow was tight. To support the expansion of the business scale, the company's short-term loans increased by 2.1 billion yuan. The surge in investment returns reduced the decline in net profit. The company reduced its holdings of Societe Generale Securities by 9.35 million shares and confirmed investment income of 100 million yuan, leading to a 9.6-fold increase in investment income over the same period last year, accounting for 14.8% of total profit. If investment income is deducted, the decline in the company's net profit increases to 9%. Maintain an “Accumulated Holding-A” rating. The construction machinery industry will face greater adjustment pressure in 2012. We expect the company's net profit to be 540 million yuan, 659 million yuan, and 748 million yuan respectively, up -5.8%, 22%, and 13.5% year-on-year. The corresponding EPS is 0.68, 0.82, and 0.94 yuan, maintaining the “increase in holdings - A” investment rating. Risk warning. The country's macro-control led to a fall in fixed asset investment exceeding expectations; there is a risk that raw material prices will rise.