The company is expected to have high growth, with a "buy" rating for the first time.

It is estimated that the EPS for 11-12 will be 0.70,1.0 yuan, the investment rating will be "buy", and the target price will be 26 yuan.

Announced the acquisition of new energy equipment assets of the group, which is beneficial to the business layout of wind power gearbox.

With reference to the paid-in capital of Dongli New Energy and the net asset value audited on February 28, 2011, the acquisition price was determined at 118 million yuan through negotiation. As of February 28, 2011, the total assets of Dongli New Energy is 113 million yuan, the total liability is 42000 yuan, the owner's equity is 112 million yuan, the net profit is 69300 yuan, and the net cash flow generated by operating activities is 3.88 million yuan. The acquisition is conducive to the industrial layout of large-scale wind power gearboxes and other products. At present, the company is carrying on the research and development and investment of 2MW wind power gearbox, and the main purpose of this acquisition of Dongli New Energy is to further expand the business of large-scale wind power gearbox, and will use the land won by Dongli New Energy to implement the industrialization project of 3MW wind power gearbox.

The supporting infrastructure around the land is perfect, which is suitable for the development of high-end products such as large wind power gearbox.

The performance in 2010 was basically in line with expectations, and the profit growth rate was lower than the income growth rate.

The 2010 revenue was 709 million, up 33% from the same period last year, and the net profit belonging to the shareholders of the parent company was 84.01 million, an increase of 2% over the same period last year, realizing EPS0.43 yuan. The range of net profit is lower than the increase in income, mainly due to the increase in expenses during the period (the financial expenses increased by 12.83 million yuan over the previous year, because the interest on the loans of the previous year was included in the capital; at the same time, the non-operating income and expenditure decreased by 8.48 million yuan over the previous year.

High-power heavy-duty gearbox, modular high-precision reducer will be high growth.

Main modular deceleration motor, high-power heavy-duty gearbox, modular high-precision reducer, modular motor, wind power gearbox. In mid-2010, the first three products accounted for 36%, 32% and 23% respectively, accounting for 91% of the total. In 2011, the traditional modular deceleration motor is estimated to grow only slightly, and the high-power heavy-duty gearbox length and modular high-precision reducer are expected to grow by more than 30% as the project reaches production.

After the acquisition of power new energy, the progress of the company's wind power gearbox project will be accelerated, and the production capacity will also be released faster.

Wind power gearbox has large market capacity and high gross profit margin, which is a new growth point of the company. It is expected that the wind power gearbox will begin to achieve revenue in 2011 and will increase in volume in 2012, and the growth space is expected to open.

Risk hint: wind power gearbox project is lower than expected and channel expansion is blocked.