The hollow shaft of the EMU has finally broken through the order for the new truck. According to a report on the Ordnance Industry Group website, at the trial review meeting of the autonomous 250-kilometer-per-hour EMU axle plan held by the China Railway Corporation recently, the CJ-1 EMU axle prototype from Jinxi successfully passed the review. It is expected that the conditions for the assessment of loading and use will be in place in early May. The company's prototyped axles will be loaded and tested on the Shanghai-Kunming Railway. Ping An's point of view: If all goes well, the company's EMU hollow shafts may be delivered in batches within the year. The gross margin of hollow shafts is expected to far exceed that of solid shafts, and the company will independently replace key components of EMUs. Meanwhile, China Railway's order for 5,000 C80 trucks was urgently placed, and tenders for 20,000 company-owned vehicles are imminent, and the company is about to enter a production competition. EMU hollow shafts may be delivered in batches within the year. Previously, the solid axles of Jinxi axles had been equipped in small quantities on domestic 200km/h EMUs. The price was 7,000-9,000 yuan/root, and the gross profit margin was 18%-19%. Currently, the unit price of hollow shafts produced by EMUs over 300 km/h using the joint venture Zhiqi Equipment is 440,000 yuan/piece. Assuming that China Railway Corporation tenders for 500 EMUs (standard trains) in 2014-2015, corresponding to 4,000 cars. If half of these were 250-kilometer EMUs, the demand for 4 axles per vehicle would be around 8,000. If hollow shafts for 300-kilometer EMUs are domesticated in the future, Jinxi axles will face a historic inflection point in performance. Potential China Railway C80 and private car orders are expected to boost performance. Recently, China Railway Corporation urgently summoned various truck companies to deliver 3,000 C80 trucks by the end of May, and the delivery time for 2,000 C80 cars is yet to be determined. Due to the urgent delivery time this time, we have adopted a special model where design plans, technical specifications, and parts preparation are carried out simultaneously. A total of 5,000 vehicles are compatible with 20,000 axles. The current axle requires 45 chromium-vanadium alloy steel, and the price is much higher than that of ordinary 50 type steel. This order will greatly boost the company's performance. In addition, Jinxi Axle is also expected to receive some complete orders for 5,000 C80 cars. Bidding for company-owned vehicles is about to begin this year. The number is expected to reach 20,000 vehicles, a record high since 2011, and Jinxi axles are expected to receive some orders. Major shareholders' overall listing expectations are heating up. Jinxi Industrial Group, the majority shareholder of Jinxi Axle, is a key rocket development base under the Weapons Industry Group. Jinxi Group's 2015 revenue target is 16 billion yuan, and the 2011-2015 revenue target is an average annual increase of 41%. Currently, the range, accuracy, and strategic position of new rockets have all been greatly improved, and demand for military exercises and foreign trade exports is growing rapidly. Currently, the Ordnance Industry Group is responding positively to the national call and is planning a new round of state-owned enterprise reform and asset restructuring. It is expected that Jinxi Axle may become a platform for major shareholders' asset injection in the future. Give it a “Highly Recommended” rating. We are very optimistic about the leading position of Jinxi axles in the railway equipment segment. The product structure of complete trucks, ordinary axles, and EMU hollow shafts will enable the company to maintain an oligopoly in market competition. The company's 2013-2015 EPS is expected to be 0.47, 0.62, and 0.77 yuan, giving the company a “highly recommended” rating, and the target price is 18 yuan. Risk warning: The railway truck tender fell short of expectations.