China's heavy machinery industry is growing steadily and rapidly. The heavy machinery industry is a manufacturing industry that provides various types of technical equipment for the national economy and national defense construction. It has the characteristics of high industrial correlation, strong driving capacity, and high technical content. According to the China Heavy Machinery Industry Association, the heavy machinery industry is divided into the metallurgical mining machinery sub-industry and the material handling equipment sub-industry; from 2003 to 2009, China's metallurgical mining machinery sub-industry achieved a compound annual sales revenue growth rate of 38%, the material handling machinery sub-industry average compound growth of 28%, and the overall average compound growth of the heavy machinery industry of 32%. We expect the heavy machinery industry to maintain a growth rate of around 20% during the “12th Five-Year Plan” period. Over the past three years, the gross margin of CITIC Heavy Industries has increased year by year, and its performance has grown extremely rapidly. The predecessor of the company was Luoyang Mining Machinery Factory, which was one of the country's 156 key projects during the “First Five-Year Plan” period. It was transferred to the CITIC Group in 1994, and was split and restructured into a stock company in 2007. Currently, the company is mainly engaged in the development, development and sale of large-scale equipment, large-scale complete technical equipment and large-scale castings and forgings in the building materials, mining, metallurgy, electric power, energy saving and environmental protection industries, and provides related supporting services and overall solutions. In the main product structure in 2011, building materials equipment, mining equipment and complete projects and installations were the most important sources, accounting for 21.66%, 35.93% and 16.89% respectively. From 2009 to 2011, the company's operating income grew at a compound rate of 11.32%, while net profit grew at a rate of 42.14%, far higher than the industry average and significantly higher than other heavy machinery companies. From 2009 to 2011, the company's gross operating margin was 19.43%, 28.25%, and 31.67%, respectively, which is different from the declining trend characteristics of other heavy machinery companies year by year, increasing by 3.42 and 8.82 percentage points year by year, respectively. The heavy machinery manufacturing enterprise company with the most outstanding R&D strength is currently one of the largest domestic heavy machinery manufacturers, and the largest domestic mining machinery manufacturer and cement equipment manufacturer; the company has designed and manufactured more than 6,000 mine elevators of various types, large elevators with a domestic market share of more than 85%, large-scale grinding equipment with a domestic market share of more than 80%, and the large roller press has won the title of “China Famous Brand Product”, and the domestic market share of more than 5,000 tons of cement mainframe equipment per day is over 70%. The company's technology center is one of the first 40 national enterprise technology centers certified by the country. It ranked 3rd in the comprehensive evaluation of 729 enterprise technology centers certified by the state in 2011, far higher than other heavy machinery companies; it has the largest specifications and the most advanced technology of 18,500 tons of free-forging hydraulic presses in the world, and the “new heavy machinery” project creates the company's high-end equipment advantages. The fund-raising project has achieved new growth points. The company raised capital to invest in the “high-end electro-hydraulic intelligent control equipment manufacturing project”, “new energy equipment manufacturing industrialization project” and “energy saving and environmental protection equipment industrialization project”. The construction period is 2, 3, and 3 years respectively. After completion of the project, production capacity of 1,200, 255 and 477 units of high-end equipment will be added, respectively, with a cumulative increase of 8.818 billion yuan in revenue and 1,191 billion yuan in profit. Fund-raising projects will become a new growth point for the company's profits. The issue price is 4.7 to 5.0 yuan. We expect the company to achieve EPS of 0.33, 0.39, and 0.45 yuan from 2012 to 2014, respectively. According to estimates of 15x this year and 12xPE next year, the estimated issue price is 4.7 to 5.0 yuan; according to estimates of 18x this year and 14xPE next year, the reasonable listing price is 5.5 to 5.9 yuan.