Matters: The 2013 interim report of Chengdu Road and Bridge announced that the company's total operating income was 2,578 billion yuan, up 98.55% year on year; net profit attributable to shareholders of listed companies was 174 million yuan, up 105.51% year on year, and basic income per diluted share was 0.52 yuan; the company's 2013 interim profit distribution plan is based on the total share capital of August 28, 2013, to increase 8 shares for every 10 shares to all shareholders using the capital reserve fund. The company expects net profit attributable to the 1st to 3rd quarter of 2013 to increase by 40-70% year-on-year. Brief comment: 1. The company's performance slightly exceeded expectations, accounts receivable improved slightly, and the payout ratio rose steadily. Quarterly revenue for the 2nd quarter of 2013 was $1,607 million, up 92.92% year on year, net profit was $123 million, up 124.3% year on year, faster than revenue growth, project construction progress accelerated, and revenue confirmation increased; operating in the first half of the year was -548 million, maintaining a net outflow, of which cash flow for the second quarter was -103 million; accounts receivable was 466 million, down 5.95% year on year, a slight improvement; inventory was 837 million, up 16.31% year on year; yield ratio was 72.4%, up steadily. 2. The growth rate of engineering construction was relatively rapid, gross margin increased slightly, and the transportation facilities sales business declined. The engineering construction business was 2,577 billion yuan, up 99.10% year on year, and gross margin was 14.76%, up 0.57 percentage points year on year. Transportation facilities sold 7.54 million yuan, a year-on-year decrease of 79.05%. The decline was significant. Its gross profit margin was 17.75%, up 23.79% year on year. 3. Consolidated gross margin increased, management expense ratio decreased, and net interest rate increased. The gross margin for the first half of the year was 14.76%, up 0.63 percentage points from the previous year; the financial expense ratio was 2.17%, up 0.64 percentage points from the previous year; the management expense ratio was 1.20%, down 0.67 percentage points from the previous year; the net interest rate for the first half of the year was 6.74%, down 0.23 percentage points from the previous year. 4. Revenue within the province increased significantly, while the share outside the province declined. Business revenue within the province was 2,328 billion yuan, up 141.78% year on year, while revenue from outside the province was 250 million yuan, down 25.49% year on year, while the share outside of the province declined. 5. Profit forecast and valuation. The company has excellent quality. Unlike other regions, Sichuan is located in the central and western regions. Recently, the State Council emphasized strengthening infrastructure construction in the central and western regions, and future development prospects are promising. We expect the EPS for 13-14 to be 0.92 and 1.18 yuan, giving PE 15 times that of 2013, with a target price of 13.8 yuan to maintain the “buy” investment rating. 6. Main risks: economic downturn risk; order delay risk; repayment risk.