Event: The “Guangdong Province's Three-Year Action Plan for Industrial Transformation and Upgrading (2015-2017)” (hereinafter referred to as the “Plan”) was officially released. Guangdong will actively adapt to the new normal of economic development and promote economic transformation and upgrading through industrial transformation and upgrading. From 2015 to 2017, the provincial finance allocation was 51.6 billion yuan, focusing on supporting industrial transformation and upgrading. The “Plan” proposes to give full play to the main role of industry in promoting economic growth, structural optimization, and power transformation by strengthening the dominant position of enterprises in independent innovation, implementing a new round of technological transformation, cultivating new economic growth poles, focusing on the advanced equipment manufacturing industry belt on the west bank of the Pearl River, the electronic information industry belt on the east bank of the Pearl River, and the eastern and western industrial parks of Guangdong, and promoting intelligent manufacturing and green industrial development. The “Plan” suggests that by the end of 2017, Guangdong Province's industrial progress towards high-end, intelligent, and greening will further accelerate, initially forming a modern industrial system leading domestically and with international competitiveness, and steadily transforming from a major industrial province to a strong industrial province. Comment: 1. We believe that this policy will accelerate the upgrading of traditional manufacturing in Guangdong Province, promote the development of the intelligent equipment industry in Guangdong Province, and benefit listed companies: Julun Co., Ltd., Guangri Co., Ltd., Songde Co., Ltd., Guangzhou CNC (not listed), etc. It is expected that in the next three years, orders for intelligent equipment will continue to grow rapidly. Benefiting from the Guangdong government's policy of encouraging high-end equipment and intelligent equipment, the subsidy income of enterprises such as Julun Co., Ltd. will increase dramatically. 2. The profit growth rate of Julun Co., Ltd. in 2014 was lower than the revenue growth rate, mainly because of the obvious increase in expenses. In 2014, we achieved operating income of 1,067 million yuan, up 18.42% year on year; realized operating profit of 169.5 million yuan, down 9.38% year on year; realized net profit attributable to shareholders of the parent company was 150 million yuan, down 7.87% year on year; profit growth was lower than revenue mainly because sales expenses and financial expenses increased by 63% and 52%, respectively. In 2014, the company's tire molds maintained steady growth, and the full hydraulic vulcanizer brand was number one in the industry. Robots continued to develop innovative models, and the first complete automated tire production line was launched in Hangzhou. The macro-economy is sluggish, and Julun is also facing problems such as price cuts for vulcanizers in its traditional business, tire mold growth rate, and decline in gross margin. 3. Reiterate the reasons for recommending Julun Co., Ltd.: (1) Although the performance of Julun Co., Ltd. has maintained steady growth over the past few years, and the growth of tire molds is lower than that of listed companies in the same industry, from a strategic point of view, Julun has been successful. The company's products range from tire molds to vulcanizers to industrial robots, while seizing several refinancing opportunities to lay out new businesses. (2) We predict that the growth rate of the company's performance in 2015 will be better than in 2014. Last year, an additional 1 billion yuan was raised, financial expenses decreased, and interest income increased. (3) The company's industrial robots and automation will achieve mass sales in 2015, and sales of complete equipment will bring profit growth points. (4) Benefiting from “Made in China 2015-2025” and the “Guangdong Province's Three-Year Action Plan for Industrial Transformation and Upgrading (2015-2017)”, it is expected that in the future, the government will increase support for labor-intensive industries to purchase advanced and suitable equipment, labor-intensive industries will fully implement equipment upgrades, and subsidies from national and local governments will also increase dramatically. Recently, the company has received many notices applying for government subsidies. 4. Julun Co., Ltd. is the leader in tire equipment industry 4.0. Its valuation is lower than the industry level, and it maintains a highly recommended rating. On March 13, we released the report “Julun Co., Ltd. - Leading Company in Tire Equipment Industry 4.0”. By April 3, it had risen 20%, close to the target price of 20 yuan set out in the report. The 2014 annual report is generally in line with forecasts. The 2015-2017 EPS remains 0.38 yuan, 0.48 yuan, and 0.53 yuan, and the 2015 and 2016 dynamic PE50 and 40 times, and PB 3.5 times, which is still below the average valuation of the industrial intelligent equipment sector. Considering that the company currently has about 1.5 billion dollars in monetary capital and wealth management products and is cooperating with Silicon Valley Paradise to acquire related companies overseas, the short-term catalyst also includes factors such as government subsidies to maintain a strong recommendation rating and raise the target price to 24 yuan. 5. Risk warning: rising raw material prices; risk of mergers and acquisitions; anti-dumping in the tire industry.