Main opinion: Revenue grew steadily, and gross margin rose moderately. In 2013, the company achieved total operating income of 549.99 million yuan, an increase of 9.44% over the previous year. In the main business, sales revenue for intelligent transportation system integration, traffic and shipping informatization and technical services, and industrial automation equipment was 517.12 million yuan, 2.64 million yuan, and 30.07 million yuan respectively, up 9.94%, 100%, and 4.68% from the same period last year. The company's gross margin was 19.74%, a moderate increase of 1.15 percentage points from 18.59% in 2012. Among them, the gross margins of intelligent transportation system integration, traffic and shipping informatization and technical services, and industrial automation equipment sales were 19.53%, 32.90%, and 22.06%, respectively, up 1.52%, 32.90%, and 0.54% year-on-year respectively. Against the backdrop of a severe macro environment and fierce competition in the transportation engineering market, the company's performance showed a steady growth trend during the reporting period. Intelligent transportation system integration is still the company's main business, accounting for up to 94% of revenue; the increase in gross margin is mainly due to the increase in the share of the company's BT projects and software commercialization business, and it is estimated that the trend will continue to rise in the future. Transportation informatization and technical services are a key entry point for the company seeking strategic transformation, relying on the newly expanded business field of China Shipping Group. It is estimated that the company's traditional intelligent transportation system integration business will not make breakthrough progress for the time being. Therefore, companies need to gain new market space in new fields, such as shipping informatization and smart cities. Expenses remained stable over the period, and the net profit margin declined slightly. In 2013, the company achieved operating profit of 62.31 million yuan, an increase of 17.19% over the previous year. The corresponding period expense ratio was 5.86%, which is nearly 1.8 percentage points higher than 2012. Among them, the sales expense ratio, management expense ratio, and financial expense ratio were 1.21%, 6.85%, and -2.20%, respectively. The three expenses increased 19.05%, 44.18%, and -9.39% year on year, respectively. The large changes in management expenses are mainly due to increases in R&D expenses, changes in the scope of consolidated statements, and increases in R&D expenses of parent companies. Net profit attributable to shareholders of listed companies during the reporting period was 46.99 million yuan, up 3.18% year on year, falling short of revenue growth; net profit margin 8.83%, down slightly from the net profit margin level of 9.06% in 2012; and basic earnings per share of 0.23 yuan, a slight increase of 3.15% over the previous year. The company's imputed profit target for 2014 is 50.20 million yuan, which is expected to increase by 6.83% year on year. Undertaking important BT projects led to a sharp decrease in the company's operating cash flow year over year. During the reporting period, the company undertook the mechanical and electrical engineering project for the Renhuai-Chishui Expressway in Guizhou Province. Using the BT model, the winning bid amount was 469.50 million yuan. The project confirmed revenue of 186.95 million yuan in 2013 and was included in long-term accounts receivable, but there is no cash inflow, so while it lays an important foundation for completing the annual business goals, the net cash flow generated by its special BT model, which dragged down operating activities during the reporting period, experienced a negative value for the first time, falling to -45.04 million yuan, a sharp drop of 212.20% over the previous year. According to the winning bid announcement issued by the company, the construction period of the project was 7 months, the trial operation period was 3 months, and the liability period for defects was 24 months; after the project was delivered and accepted, the contract amount was paid in four installments year by year. It is expected that the cash flow pressure on the company due to the long payback period of the project will begin to ease in 2015. However, the BT project may bring the company higher gross profit. Investment suggestions: The severity of environmental and traffic congestion issues, the rapid progress of urbanization, the country's vigorous promotion of smart city construction, and the rapid development and wide application of related technologies have created broad development space for the intelligent transportation industry. However, at present, the market for this industry is scattered. With the introduction of the BT model and the maturity of the competitive pattern of the industry, market share will be concentrated on leading enterprises in the industry with strong financing capabilities. The company is one of the first enterprises in China to enter the field of intelligent transportation systems, and has a certain first-mover advantage. Shipping informatization is a breakthrough in the company's technological and business transformation. In 2013, the company and China Shipping, the actual controller, signed the “China Shipping (Group) Corporation Auxiliary Decision Analysis System Phase I Development and Implementation Service Contract”, with a contract amount of 11.77 million yuan, marking the official entry of the company into the Group's major information technology construction projects. According to the company's development plan, in the next three years, while maintaining the steady development of the integrated business of intelligent transportation systems, the company will actively implement a value-oriented strategy for transportation and shipping informatization, and a strategy for vertical expansion of the intelligent transportation business chain and horizontal expansion of the industrial automation business. In 2014-2016, the company is expected to achieve a year-on-year increase in operating income of 10.28%, 9.14%, and 12.28%, respectively; a year-on-year increase in net profit attributable to owners of the parent company of 11.35%, 13.86%, and 15.82%, respectively; and earnings per share (diluted according to the latest share capital) of 0.26 yuan, 0.29 yuan, and 0.34 yuan, respectively. Therefore, maintain the company's “prudent increase in holdings” investment rating for the next six months. At the same time, note that the southwest market accounts for 77.97% of the company's main business revenue, so there is a risk that it depends too much on the single market.