1. Event Overview We recently conducted field research on Tyre Heavy Industries and had in-depth exchanges with company management on business conditions and future development strategies. The main business is expected to stabilize, and the focus is on strategic transformation. We are optimistic about the company's product line expansion in the field of steel smelting and business transformation through external mergers and acquisitions. Regardless of extended mergers and acquisitions, the EPS from 2014 to 2016 is expected to be 0.20, 0.26, and 0.33 yuan respectively, and the corresponding PE is 44, 34, and 27 times, respectively, giving it a “careful recommendation” rating for the first time. 2. Analysis and judgment demand is rigid, and the company's main products are expected to rise steadily throughout the year. The company's main products are the production and sales of universal couplings and drum-shaped gear couplings used in the steel smelting industry. We judge that the overcapacity pattern in China's steel industry will not change in the short term. In the future, the company's coupling revenue will come from stable replacement demand and import substitution. Couplings are industrial consumables with a service life of 1-3 years. Over the past few years, new steel production capacity has almost stagnated, but the company's products, spare parts sales, and spare parts have been able to maintain a large scale, and demand is somewhat rigid. We expect demand to stabilize in the first half of the year and a significant year-on-year improvement in the second half of the year. The commencement of the convertible bond fund-raising project at the end of the year will contribute to performance. The company issued convertible bonds at the beginning of last year to raise 320 million yuan for the three projects of precision reels, cold-rolled universal couplings, and composite skateboards. It is expected to be put into operation by the end of this year according to industry demand adjustments. It will expand the company's product line and further strengthen its market position. After completion of the project, it can produce 110 sets of precision rolls, 1,160 sets of cold-rolled universal couplings and 7,500 composite skateboards per year. Precision reels, composite skateboards, etc. target imported alternatives and have strong profitability. The gross margin of composite skateboards is as high as 55%, and precision rollers are also above 40%. We expect that with the gradual release of production capacity, it will become a new profit growth point. Joining hands with Silicon Valley Paradise to implement the path of transformation, the company announced cooperation with Silicon Valley Paradise to professionally sort out the company's strategic planning and merger and acquisition ideas. Couplings are a segmented industry for equipment manufacturing. Although they account for more than half of the steel industry, they are only over 1 billion dollars, and the ceiling is obvious. Silicon Valley Paradise is an industry investment agency engaged in mergers, acquisitions and restructuring, strategic consulting, and has rich industrial operation experience and a wide range of domestic and foreign channels and resources. This cooperation will help the company to accurately position the direction of transformation, clarify mergers and acquisitions ideas, improve the efficiency of the company's industrial operations, and share the cake of equipment manufacturing and upgrading. Executives' moves to increase their holdings demonstrate confidence in future development. The majority shareholders of the company began increasing their stock holdings in the secondary market through holding companies (Thiel Investment and Xintai Investment) in March of this year. The plan is to increase their holdings by no more than 2% of the company's total share capital within six months. Up to now, a total of 2.18 million shares have been completed, accounting for 1.2% of the total share capital. It shows that executives are optimistic about the future development of the company. 3. Stock Price Catalysts and Risk Alerts Stock Price Catalysts: Extended Mergers and Acquisitions; Risk Alerts: Downstream steel mill operations have deteriorated; Fund-raising projects are progressing slowly.