From January to September 2010, the company achieved operating income of 1,731 billion yuan, an increase of 17.97%; operating profit of 133 million yuan, an increase of 79.14%; net profit attributable to owners of the parent company of 100 million yuan, an increase of 56.8%; basic earnings per share of 0.34 yuan, and the latest diluted earnings of 0.25 yuan per share. Looking at single-quarter data, in the third quarter of 2010, the company achieved operating income of 516 million yuan, a year-on-year decrease of 64.79%; operating profit of 42.52 million yuan, a year-on-year decrease of 42.65%; net profit attributable to owners of the parent company was 30.03 million yuan, a year-on-year decrease of 52.99%; and the latest diluted earnings per share for the third quarter were 0.08 yuan. The company's gear transmission products are used in a wide range of fields, and the technical advantages are obvious. The company has the ability to design, develop and manufacture marine gearboxes from 10kW-10000kW. In recent years, the company's marine gearbox market share has reached 65.5%. The domestic market share of construction machinery gearboxes has stabilized at around 20% in the past five years. It is one of the earliest domestic enterprises involved in wind turbine gearbox research and development, and is a national standard setter for wind turbine gearboxes. In recent years, it has been trusted by famous foreign wind power companies such as GE, GAMESA, and ZOLLERN, respectively, to customize and process gear transmission products for them. Overall gross margin increased, and the ability to control expenses during the period weakened. From January to September 2010, the company's comprehensive gross profit margin was 25.35%, an increase of 3.43 percentage points over the previous year. Among them, the comprehensive gross profit margin for the third quarter was 25.52%, up 3.6 percentage points from the previous year; up 0.24 percentage points from the second quarter. From January to September 2010, the company's expenses rate for the period was 16.29%, an increase of 0.51 percentage points over the previous year. Among them, the sales expenses ratio was 2.69%, up 0.35 percentage points from the previous year; the management expenses ratio was 12.16%, up 0.34 percentage points from the previous year; and the financial expenses ratio was 1.44%, down 0.19 percentage points from the previous year. Fund-raising projects expand product production capacity and achieve “import substitution.” The funds raised this time will be invested in 4 projects, including advanced ship propulsion systems, high-precision marine gearboxes, construction machinery transmission devices, key components of wind power generation accelerators, and automatic transmission technology research and development for heavy and special vehicles. The fund-raising project closely revolves around the company's existing main business to further optimize the product structure and enhance the company's overall competitiveness. Profit forecasting and investment ratings. The company raised capital to expand product production capacity, optimize product structure, and gradually achieve “import substitution”. We expect the company's EPS to be 0.33 yuan, 0.39 yuan, and 0.53 yuan from 2010 to 2012. Based on the calculation of the closing price of the previous trading day, the corresponding dynamic PE was 49 times, 42 times, and 31 times, respectively. Since the fund-raising project will be put into operation until the end of 2012, the company's valuation is currently too high, so we gave the company a “neutral” rating for the first time. Risk warning. 1) The development of the mechanical parts industry in which the company is located is strongly correlated with the macroeconomic situation. 2) Steel and pig iron account for more than 14% of operating costs, and price fluctuations will pose a certain risk to the company's performance growth.