Matters: On the 25th, the company released its 12-year annual report and performance forecast for the first quarter of '13: (1) The company achieved revenue of 314 million yuan in '12, net profit of 37.84 million yuan, a year-on-year increase of 46.77% and 45.97%, corresponding EPS of 0.38 yuan, net profit growth rate after deduction of 31.34%; (2) The company is expected to achieve net profit of 4,7243 million yuan to 5.4512 million yuan in the first quarter of '13, an increase of 30%-50%. Main opinion: The main business is growing rapidly, and the cost control results are remarkable. There are two main reasons why the company achieved rapid growth in 12 years: one is the high growth of the company's main business. During the reporting period, the company achieved revenue from intelligent construction systems of 24,383.1 million yuan [77.72% of revenue], an increase of 80.04% over the same period of the previous year, and realized revenue from intelligent urban rail transit systems of 614.638 million yuan [19.59% of revenue], an increase of 71.71% over the same period of the previous year; second, the company set up a leading group to reduce costs. In 2012, the company set up a leading group to reduce costs. Management costs and comprehensive cost control have reduced sales expenses by 9.2% year over year, and management expenses increased by only 2.59% year over year. Gross margin declined by 4.77 percentage points, mainly due to differences in project structures, and there is little risk of a continued downturn in the future. Urban rail transit investment is accelerating, and rail transit business may accelerate growth. In 2012, the company achieved revenue from intelligent urban rail transit systems of 61.4638 million yuan, accounting for 19.59% of revenue, an increase of 71.71% over the same period last year, and added contracts of 17.88 million yuan in 2012. From this, it can be seen that the high growth of the company's rail transit business in 12 years was mainly a confirmation of the operating income achieved by the projects carried out in the previous year. Along with the approval of rail transit investment in various regions in 2012 and the acceleration of the promotion of some rail transit in the past, the growth rate of domestic urban rail transit investment is expected to reach 15% or more starting in '13. The 12th Five-Year Plan period was all a period of rapid growth. The company has rich products and leading technology in the field of intelligent rail transit business. It has mature solutions in the fields of integrated monitoring systems, communication systems, and signal systems, where demand is strongest. It has strong market competitiveness, and is expected to seize the golden period of industry investment and achieve continued high growth. There are plenty of orders for intelligent construction, and the industry has a bright future for development. The company's intelligent construction business ranks in the top ten in the industry, and has leading technology, products and major project advantages in the industry. In 2012, the company achieved revenue from intelligent building systems of 24,383.1 million yuan, an increase of 80.04% over the same period last year. This year, the new campus of the Hengqin Island Macau University increased revenue by 128.2624 million yuan. However, the company signed a new construction intelligence business of about 450 million yuan in 2012, and the orders that have been signed but have not been executed are about 300 million yuan [including the nearly 70 million yuan to be confirmed by the University of Macau in Hengqin Island to be confirmed in 13]. It has won the bid but has not yet signed an order or is close to 200 million yuan. These have guaranteed the company's continued high growth in this business in '13. At the same time, along with the raising of national energy saving and emission reduction standards and the promotion of intelligent construction, the intelligent building industry will maintain rapid growth in the 12th Five-Year Plan period and beyond. Regional and business expansion is accelerating, and market competitiveness continues to improve. Beginning in 2012, the company actively expanded its regions and fields to accelerate growth: (1) In terms of regional expansion, the company's revenue in South China still accounts for about 70%, but the company's business growth in Southwest China, East China, and Central China all achieved rapid growth. In 2012, the company used excess capital of 120 million yuan to invest in the establishment of the Hefei base and operate as a wholly-owned subsidiary. The first phase of the project is expected to achieve sales revenue of 230 million yuan, total profit of 31 million yuan, and net profit of 26 million yuan. At the same time, the establishment of branches in other regions will be accelerated, and the expansion of the company's business area will usher in breakthroughs in the future; (2) In terms of business areas, the company is actively seeking high-quality investment projects, trying to cooperate through capital means such as mergers and acquisitions, cooperative investments, and partnerships to broaden the scope of business, quickly enter business fields related to the present, enhance scale efficiency, and achieve rapid layout in business areas such as intelligent construction, intelligent rail transit, intelligent high-speed railways, and safe cities. At the same time, in '13, the company will reform its production and operation model, optimize the management structure, set up division operations, and improve production efficiency, and market competitiveness will continue to improve. Entering a period of accelerated growth, we continue to be optimistic about the company's future development. Along with the acceleration of the company's business expansion, optimization of business processes, and adjustment of business strategies, the company's market competitiveness continues to improve; at the same time, the company continues to improve the company's position in the fields of intelligent construction, intelligent rail transit, intelligent water resources, etc., through measures such as talent introduction and R&D investment, and the potential for continuous growth is gradually showing. It is conservatively estimated that the company can achieve EPS of 0.51 yuan, 0.63 yuan, and 0.77 yuan respectively from 2013 to 2015, corresponding to 41.90, 33.72, and 27.40 times PE. Compared with the initial recommendation, the short-term increase has already exceeded 100%. Focus on adjustment risks and continue to recommend. Risk warning: The risk of a sharp increase in management and sales expenses, and the risk of a continued decline in gross margin may be a major risk.