The gross profit margin of the product has declined, and the rigidity of expenses has led to a sharp decline in the company's net profit. Due to the overall downturn of the coal machinery industry, the intensification of competition led to a decline in the gross profit margin of the company's products, in which the gross profit margin of supporting equipment decreased by 6.25%; in addition, the rigidity of management expenses and the increase in financing costs led to an increase in financial expenses and other factors, resulting in a substantial decline in the company's net profit by 69.23%. We believe that due to the sharp drop in coal prices, the overall overcapacity of coal mines will directly lead to a substantial reduction in the number of new coal mines, which will have a great impact on the coal machinery industry, and it will be difficult for the industry to recover in the short term, and the company will also be affected.

Follow-up needs to pay attention to the company's progress in the field of aviation equipment. In order to get rid of the excessive dependence on the coal machinery industry, the company has invested in small drone projects and aero-engine projects, although it is difficult to get profits in the short term, but the prospect is still worth looking forward to.

Profit forecast: in view of the pessimistic forecast for the coal machinery industry, we downgrade the company's earnings forecast and expect earnings per share for 13-15 years to be 0.10 (- 37.14%), 0.08 (- 55.68%) and 0.10 (- 57.74%) respectively, downgrading the company to "hold".

Risk factors: coal prices continue to fall; drones and aero-engine projects are progressing less than expected.