The performance increased steadily in the first half of the year. In the first half of 2010, the company achieved a total operating income of 324 million yuan, an increase of 33.25% over the same period last year; the net profit attributed to shareholders of listed companies was 53 million yuan, an increase of 31.16% over the same period last year; and basic earnings per share was 0.41 yuan. Basically in line with expectations.

The numerical control rate is improved and the product structure is transformed. To adapt to the high-end trend of the domestic machine tool industry, the numerical control rate of the company's product structure has been continuously improved, which has reached 80%. The company has benefited from the construction of high-speed rail, but is not limited to this field, actively developing large-scale precision CNC gantry machine tools, extending to nuclear power, aerospace and other large-scale engineering fields.

Future nuclear power projects are worth looking forward to. The company sets up a nuclear power company, plans to build an international advanced nuclear power heavy precision parts and complete equipment manufacturing base, and forms a relatively complete nuclear power equipment industry chain with the holding subsidiary East China heavy Industry, which is worth looking forward to.

Give a rating of "overweight". We estimate that the EPS of the company in 2010-2011 is 0.75RMB and 1.04RMB respectively, corresponding to 36.91x and 26.62x PE in 10-11 years, which is higher than the average valuation of PE33.34 times in the machine tool industry. However, considering the good growth prospects and company status of the industry in the future, the company is given an "overweight" rating.

Risk hint. The economic cycle leads to the fluctuation of downstream industries, and the progress of opening up new areas lags behind expectations.