Event: The company announced its 2010 annual report today: In 2010, the company achieved operating income of 386 million yuan, an increase of 30.39% over the previous year, net profit attributable to the parent company of 42.55 million yuan, an increase of 23.31% over the previous year, and fully diluted EPS of 0.476 yuan. There will be no increase or distribution of profits in 2010. Comment: Give the company an investment rating of “increased holdings.” We forecast the company's EPS for 2011-2013 to be 0.68 yuan, 0.93 yuan, and 1.10 yuan, respectively. As far as the customer structure is concerned, the expansion of production capacity pushes the company to continuously develop new customers, and the customer concentration has declined markedly, indicating that the company is focusing more on “growing bigger” while “getting stronger.” The weight reduction of automobiles will bring about a relatively rapid development of the aluminum alloy casting market, and the increase in the amount of aluminum used in bicycles will cause the company's sales growth rate to exceed the growth rate of the automobile industry. The company enjoys a good reputation among middle and high-end customers, and is likely to become one of the main beneficiaries of export growth and import substitution. Considering that GEM valuations have a certain premium, we gave the company an investment rating of “increased holdings.” The main focus on the auto parts business has led to a significant increase in tooling tool revenue. The company's revenue for the current period increased by 30.39% year on year. By business, the company's current auto parts business revenue increased by about 30% year on year, and other businesses increased by about 92% year on year. Other business revenue mainly comes from sales of tooling tools such as molds, inspection tools, and jigs. Some of the company's molds, inspection tools, and jigs have signed sales contracts with customers, and others are not sold abroad. In 2010, the number of newly developed products was large, and the gross profit share of this part increased to 10.6%. The company's communications business revenue decreased by about 12% year on year, and its share of gross profit fell below 2%. The communications business mainly provides additional products in response to requests from major customers to maintain customer relationships. The company's future focus will still be on auto parts products. Adhere to the international business strategy, dig deep into old customers, and expand new customers. The company has become a first-class supplier to famous domestic and foreign automakers such as Ford, Dongben Automobile, Fiat, GAC Fiat, Cummins, Chrysler, and Guangzhou Automobile Group. In the future, it will dig deep into old customers such as Ford and Cummins, and strengthen the development of new customers in the international market. Rely on joint venture brands to strengthen, and enter independent brands to grow bigger. The company has received a high level of recognition from joint venture brand customers. After expanding production, it will enter independent brand customers with product quality advantages and further expand on a large scale. At present, the company has made full contact with state-owned brand manufacturers such as Jiangling Motors, Hunan Changfeng, Guangzhou Automobile, and BMW Brilliance. Some products are already in the stages of sample delivery, trial production, or mass production. Exports have recovered relatively quickly, and the customer structure is diversified. In 2010, the company's export revenue accounted for 27.51%, and the export growth rate was 26.7%. Compared with the negative growth in 2009, exports recovered faster. The revenue share of the company's top five customers fell from 90% to 84.7%. The main reason is that the company is starting to expand the number of newly developed customers. As production capacity for fund-raising projects is gradually released, the company's customer structure will become more diversified. There has been a decline in gross margin. In 2010, the company's consolidated gross margin was 26.25%, down 2.08 percentage points from the previous year. This may be due to rising raw material prices and lower prices for old products. The company currently has many new products in the trial production stage, and it is expected that the increase in the share of new product sales in 2011 will effectively support gross margin. Expense rates are kept low. In the face of a sharp increase in the company's revenue, management expenses were reduced by 9.6% year on year, and the management expense ratio fell to 7.44%, a decrease of 3.3 percentage points over the same period last year. In 2010, the company's sales expense ratio was 4.11%, a slight increase of 0.24 percentage points over the previous year, mainly due to the increase in the proportion of product exports and sales this year, changes in logistics transportation, packaging, expenses, and product export expenses. There are sufficient reserves of R&D projects to provide a basis for revenue growth. The company invested 10.178 million yuan in research and development expenses in 2010, accounting for 2.64% of operating income. Major uncertainties. The prosperity of the automobile industry is declining; there is still downward pressure on gross margin.