Incident: Recently, I went to Xiamen Engineering Co., Ltd. to conduct field research and had in-depth exchanges and communication with the company on the company's business situation and development plans. Opinion: 1. As one of the leading loaders in China, the company has a stable position in the industry. The product range of Xiagong Co., Ltd. covers 6 categories, including loaders, excavators, forklifts, small machinery, pavement machinery, and environmental protection machinery. Among them, loaders contribute most of its revenue. The company's loader sales volume has remained in the top three in the industry, and its market share has been rising steadily in recent years. According to statistics from China Construction Machinery Trading Network, the company sold a total of 4,085 loaders in 2011, an increase of 16.7% over the previous year. The domestic market share reached 16.2%, an increase of nearly 0.5 percentage points over 2010. 2. The release of production capacity at the Jiaozuo production base will enhance the company's competitiveness in the North China market. The company is now implementing the second phase of the technical improvement project at the Xiagong North (Jiaozuo) equipment manufacturing base. The current production capacity of the Jiaozuo production base is 10,000 units, with an average monthly production capacity of 800 units. After technical improvements are completed, the base will produce 15,000 loaders and 10,000 forklift products per year. The release of production capacity at the Jiaozuo base will help the company expand its market share in the northern region and improve the company's profit level. This is because the company's overlapping production base with the end use site has the following advantages: first, due to the low average profit level of the industry, mainframe freight as an important cost has a direct impact on product gross margin; second, due to cost and component supply considerations, the manufacturer closest to the market in physical distance will gain a greater competitive advantage. Currently, the key market for domestic loaders is mainly distributed in two major regions: the largest region is centered around Liangshan (Shandong, Shanxi) and Lianghe (Henan, Hebei), covering the North China region in provinces and cities such as Beijing, Tianjin, Inner Mongolia, and northern Shaanxi. The second largest region is centered around the clouds, Gui, and Sichuan, and extends to the southwest central and southern regions of the provinces and cities of southern Shaanxi, Hunan, Hubei, and Chongqing. These two major regions account for more than 60% of the country's market sales. The company's market share in North China is lower than its national average. Increased production capacity at the Jiaozuo base will enhance the company's competitiveness in the North China market. 3. Excavators are an important growth point for the company's future performance. According to statistics from the Construction Machinery Trade Network, the company sold a total of 4,253 excavators in 2011, an increase of 51.8% over the previous year, with a market share of 2.4%, an increase of 0.7 percentage points over 2010. The company currently has an excavator production capacity of around 6,000 units. According to the plan, the excavator production capacity will increase to 15,000 units in 2013. The gross margin of the company's excavator business is about 8 percentage points higher than that of loaders. If excavator production and sales exceed 6,000 units in the future, the gross margin of the product will increase further. With the maturity of the company's product quality and channels, excavator products will become an important growth point for the company's future performance. Conclusion: 1) The promotion of the second phase of the technical improvement project at the North China (Jiaozuo) production base will enhance the company's competitiveness in the North China market, and the company's market share will steadily increase in the future. 2) Product manufacturing costs and transportation costs at the North (Jiaozuo) production base are lower than those of the headquarters. In the future, as production capacity increases, the company's profit level will increase. 3) The company's loader sales are expected to remain stable this year. With the release of production capacity in Jiaozuo Industrial Park, the company's market share in the northern region will further increase. Due to its small current base, the excavator business is still in the cultivation stage. We expect the company's earnings per share from 2012 to 2014 to be 0.70 yuan, 0.80 yuan, and 0.87 yuan, respectively. The corresponding PE is 12.9 times, 11.3 times, and 10.8 times, respectively. We give it a “recommended” rating. Risk warning: 1) Domestic fixed asset investment fell far short of expectations; 2) The sharp rise in raw material prices led to a decline in the company's gross margin. 3) The company's production capacity growth was lower than expected.