Key points We held a conference call with railway construction equipment management last Friday. The main contents are as follows: there are plenty of orders in hand; new orders signed in the first half of this year focus on the overhaul and parts sectors. The company had orders of 2.4 billion yuan at the end of last year. The new orders signed in the first half of this year mainly focused on overhauls and parts procurement. There is a clear seasonal nature of tenders in railway history. It is estimated that new orders will be between 3.5 billion and 3.8 billion yuan for the whole year, including 2.4 billion yuan for large-scale maintenance machinery, 600 million to 700 million for parts, 400 million for overhaul services, and 50 million for maintenance and construction. The procurement volume of the Railway Master Plan increased rapidly during the “13th Five-Year Plan” period; the company's revenue will grow steadily in 2016. The procurement amount of the “13th Five-Year Plan” plan is expected to increase by 40% compared to the “12th Five-Year Plan”. In addition, in the second half of this year, Iron and Steel will have additional “12th Five-Year” purchase orders of around 1 billion yuan. Looking at 2016, the company's large-scale maintenance machinery business will maintain 10% growth; the overhaul business is expected to grow by 35% this year; and the parts business will achieve revenue of 600 to 700 million yuan. In particular, nearly 300 million new product contracts signed in 2013/14 are about to be delivered, and in the second half of the year, contact network inspection vehicles purchased by Railway General Procurement will also be delivered one after another, involving 528 million yuan in revenue. The subway business opened up a ceiling for growth. The company signed an order for 3 subway milling machines last year, each worth around 70 million. This year, the order will be delivered to Kunming first. There is a strong demand for subway milling and grinding trucks in the Beijing market. There is a demand for 6 units. Furthermore, due to the high value of individual subway products, profit margins are also higher. In terms of market competition, the company's competitiveness is that its products are more cost-effective than those imported from abroad and can provide localized services. Last year's capital expenditure was 700 million yuan, and this year's capital expenditure was 600 million yuan. The main direction is the Beijing Science and Technology Park. The construction of the Beijing Science and Technology Park has experienced some delays, mainly due to the slowdown in approval by the municipal government. In early June, the company's project will be submitted to the Beijing Municipal Planning Commission for review. After approval, a license to commence construction can be obtained. The equipment involved can be purchased, and the plant tender will also begin. In terms of mergers and acquisitions, the target of the acquisition is a company with strong design capabilities and qualifications in the railway industry. The core target market is Europe. The recommended company stock price is currently 9.1x/8.0x corresponding to 2016/17e P/E. Maintain the 2016/17e EPS forecast at $0.34 and $0.39, and maintain the target price at HK$5.56, corresponding to the 2016e14x P/E, maintaining the recommended rating. Risk reporting performance falls short of expectations