In 2011, the company achieved operating income of 5.126 billion yuan, a year-on-year increase of 40.37%; operating profit of 141 million yuan, an increase of 24.49%; net profit attributable to the parent company of 70,884,600 yuan, an increase of 5.97%; and diluted earnings per share of 0.2 yuan, slightly lower than expected. Profit distribution plan: It is proposed to distribute a cash dividend of 0.5 yuan (tax included) for every 10 shares based on the total share capital at the end of 2011. The first quarter of 2012 achieved operating income of 706 million yuan, a year-on-year decrease of 17.36%; operating profit of 12.172,400 yuan, a year-on-year decrease of 36.27%; net profit attributable to owners of the parent company of 6.758 million yuan, a year-on-year decrease of 43.12%; and basic earnings per share of 0.0174 yuan. The gross margin for the first quarter rose 0.14 percentage points year on year, but the expense ratio increased 0.58 percentage points year on year due to increased interest expenses. The main reason why the company's profit growth rate in 2011 was lower than the revenue growth rate was 1) the effective tax rate rose year by year; 2) during the extension expansion process, the company generally invested in a ratio of 1/2 to 2/3 of the shares to establish subsidiaries, so the profit and loss of minority shareholders grew rapidly. The profit and loss ratio of the company's minority shareholders rose from 26.95% in the same period last year to 36.04% during the reporting period. The scale is expanding rapidly. In 2011, the company entered the Xinjiang, Tibet and Henan markets; 43 new direct-run chain stores were added. By the end of 2011, the company had established a nationwide chain network layout with 203 direct-run stores and 2,413 agency dealerships. Among them, the revenue growth rate in the southern market was 65%, mainly due to the expansion of consolidated revenue and sales scale of construction machinery in Sichuan; sales in the northern market increased by 31.4%, mainly due to the increased operating income (107 million yuan) of the Tianshui Jifeng store in Gansu, which was built at the end of last year, and the gradual release of regional management pooled advantages during the reporting period. There was an increase in gross margin and period expense ratio in 2011. In 2011, the company's consolidated gross margin increased 1.39 percentage points to 13.84% year on year; the period expense ratio increased 1.54 percentage points to 10.84% year on year, of which the sales expense ratio increased by 1.06 percentage points, mainly due to the expansion of the company's size, the corresponding increase in transportation expenses and personnel remuneration; the financial expense ratio increased by 0.44 percentage points year on year due to the increase in loans and payable notes. The acquisition expansion model increases revenue without increasing profits; new growth points need to be sought in the future. The company is the only agricultural machinery chain sales enterprise in the country, and has established four major business systems focusing on agricultural machinery, trucks, construction machinery, and general mechanical and electrical products. In recent years, the company has achieved ultra-rapid large-scale growth through “mergers, acquisitions and restructuring” and “new establishment and integration” throughout the country. At the same time, it has been able to fully enjoy the government's preferential policies and subsidies for agricultural mechanization, and its market share has continued to increase. However, since agricultural machinery has a long service life and purchasing demand is phased, judging from the markets that have entered so far, the revenue growth rate is already low, while newly entered markets are often carried out through acquisition models. The rapidly rising minority shareholders' interests have shared the growth of the company's performance. In the future, the company needs to gradually acquire minority shares while developing new demand that has already entered the market in order to maintain a large market share. Profit forecast and rating: We expect the company's 2012-2013 EPS to be 0.24 yuan and 0.27 yuan respectively. Based on the latest closing price calculation, the corresponding dynamic price-earnings ratio is 35 times and 31 times, respectively. We maintain the company's “increased holdings” investment rating. Risk warning: Legal risks caused by irregular operation of the industry, and the balance ratio continues to rise.