Affected by the financial crisis and the expansion of sales strategies in various fields, the company's revenue growth rate and gross margin level declined in 2009. However, judging from the current order structure, changes in gross margin, and product echelon construction, the company has moved out of the adjustment period and entered a stage of rapid growth: the order structure shows that expansion in various fields has paid off. The metallurgical sector is the company's traditional market, accounting for up to 85% of the company's revenue and the third largest market share in the country. After listing, the company gradually adjusted its sales strategy and impacted new markets such as lifting, port equipment, power equipment, and building materials machinery through modular high-precision reducer products. Currently, judging from the company's handheld orders, orders in the metallurgical sector have dropped to around 60%. Strong expansion in new fields has effectively reduced the company's dependence on a single industry and laid the foundation for the company's long-term development. Gross margin will pick up. In the fourth quarter of 2009 and the first quarter of 2010, the company's overall gross margin declined somewhat due to increased depreciation and a relatively high share of products with low gross margin. However, with the gradual mass production of modular high-precision speed reducers and the gradual maturity of sales strategies, the company's gross margin level will gradually rise in the future. The company's consolidated gross margin level is expected to rise back to the 2008 level of 34% in 2010. The product chain is perfect. The company management attaches great importance to the hierarchical construction of products. The high-power heavy-duty gearbox in 2005 and the modular high-precision speed reducer in 2009 all gradually improved the company's product system and enhanced its comprehensive strength. Currently, the company's 1.5 MW wind power gearbox is undergoing third-party certification, and is expected to start contributing revenue in 2011; high-speed locomotive gearboxes have entered the industrialization stage; and construction machinery gearboxes are being developed. The development and introduction of a range of new products to the market ensures the sustainability of the company's future growth. Investment ratings and valuations. As a leading enterprise in the industry segment, the company has a clear strategy, perfect product reserves, and determined growth potential for the next three years. According to the comprehensive dilution of 42 million additional shares issued by the company, we estimate that the company's EPS in 2010, 2011, and 2012 was 0.56, 0.87, and 1.14 yuan, respectively, and the corresponding PE was 24 times, 16 times, and 12 times, respectively. We believe that after going through adjustments, the company has entered a stage of rapid growth, with a compound profit growth rate of 45% over the next three years. The current PE level does not reflect the company's rapid growth expectations and is underestimated. We gave a target price of 20 yuan, corresponding to 23 times the dynamic PE in 2011.