Key events in the report describe Weichai Heavy Machinery's 2013 annual report. The main operating results are as follows: in 2013, the company achieved operating income of 232 million yuan, up 10.39% year on year; realized net profit attributable to shareholders of listed companies of 39 million yuan, down 46.83% year on year. Basic earnings per share: 0.14 yuan/share. Incident comment The market for new products is developing well, and the performance of the large market is not as good as during the recovery period. The company was affected by Manchester Engine a few years ago, and profits declined markedly. The large engine market was developing smoothly and orders were plentiful. At the end of 2013, the company's strategic new product, a high-power medium-speed diesel engine, had orders of 391 million yuan. High-power medium-speed diesel engines are currently mainly supporting maritime surveillance ships, and are fully supporting various ship types such as offshore and ocean-going ship auxiliary engines; as the industry recovers and the localization of components accelerates (which can affect costs by more than 20%), high-power medium-speed diesel engines have entered a harvest period, and the large engine can roughly balance profit and loss next year. Net profit fell sharply by 46.83% year on year, mainly due to a sharp increase in sales expenses and impairment of inventory assets. The main reason for the sharp increase in sales expenses of 121.34% is that the company paid MAN a certain amount of production and sales license fees to MAN in order to expand the scope of high-power medium-speed diesel production licenses, and the increase in service costs. The impairment of the company's inventory and assets during the reporting period was estimated at 32.329 million yuan, a significant increase over the previous year. Diesel engine power generation relies on large engine business expansion, and breaking through the distributed energy market overseas is a future priority. Power plant units have entered a period of strategic development, and this year's growth is expected to break 50%. Domestic market companies rely on capital and channel networks to integrate downstream OEM manufacturers and strengthen their control over key markets; important points of interest in 2014 are expected to break through overseas distributed energy markets. The 14-year turnaround will continue to drag down performance. Foundry companies that became established at the end of '13 are new loss points this year, but internal procurement costs are expected to be at the same level as the original procurement model for the next two years. The fundamentals of the industry are at the bottom, the company's market share has increased, and the first quarter started well. The company's share of the ship engine market has risen for three consecutive years, from 50% in 2011 to more than 60%; in particular, the market share of 200 and 250 products is even higher. The first quarter started well, and sales of marine aircraft increased 20-30% year over year. The company's EPS is expected to be 0.27 and 0.55 yuan/share in 2014 and 2015, respectively; the corresponding PE is 30 and 15 times, respectively, and the performance has entered an upward inflection point, giving it a “recommended” rating. Risks suggest that the high-power medium-speed diesel engine market is developing, low expectations, foundry companies lose more than expected