Key points supporting the ratings The metallurgical equipment business in 2011 is undergoing a period of transformation, and nuclear energy equipment cannot make up for it, but we believe that the growth of metallurgical equipment in 2011 and 2012 will exceed previous expectations. China will benefit from the government's policies to vigorously promote the development of high-end manufacturing and strategic emerging industries. Currently, China's first-hand contract orders are full, and the main production equipment is operating at full capacity. We expect the company's sales revenue to increase 9% year on year in 2011, sales volume to reach 9.3 billion yuan, net profit for 2011 to increase 10% year on year, net profit to reach 870 million yuan, and earnings per share of 0.13 yuan. The main risk companies facing ratings belong to the heavy machinery industry. They mainly provide heavy equipment for the metallurgical, petrochemical, electric power and other industries. They are upstream industries in the country's basic industries, and are greatly affected by the macroeconomy. Valuation We estimate that the company's profitability will improve over the next two years. Based on an expected price-earnings ratio of about 28 times in 2012, we lowered the company's target price from 5.88 yuan to 4.76 yuan, but maintained the company's buying rating.