Matters Recently, we investigated Jinxi Axle Company and had exchanges with relevant company personnel. Main point of view 1. Judging from the composition of revenue and gross profit, the company's operating income mainly comes from vehicles, axles, and vehicle accessories (wheel pairs, side racks). The vehicle business dominates, and is also the most important reference point for judging the company's future performance, followed by axles, wheel pairs, and side racks for rocker pillows. We believe that investment in railway equipment will not increase much next year. The number of tenders for trucks is basically the same as this year, the company's performance is stable, and a new round of growth will begin in 2015. 2. The company's vehicle demand includes three aspects, namely the Railway Corporation's bidding, the bidding for its own vehicles (previously the Railway Administration was responsible for bidding), and exports; axles and wheel pairs are mainly for truck axles, and demand includes the bidding and export of north-south vehicles; and the side racks of the cradle are mainly exports. From the demand analysis of various business sectors, it is easy to see that the Tiezong truck bidding is the core driving force for the company's performance growth. 3. At the end of the 12th Five-Year Plan, the country's railway operating mileage reached 123,000 kilometers. Based on this calculation, the investment demand for infrastructure in 2014 and 2015 was 1.5 trillion yuan to 1.8 trillion yuan (currently, there are media reports that railway investment will be reduced, so we should be optimistic, especially when it comes to infrastructure investment). The planned fixed asset investment capital is 1.5 trillion yuan, which is quite tight. 4. The Railway Corporation will increase the scale of debt issuance and increase the scale of infrastructure investment next year, but when capital is relatively tight, priority will be given to guaranteeing investment in infrastructure. Investment in equipment will be affected next year, and investment in equipment will begin to resume in later years. Historically, investment in railway equipment also generally lags behind investment in railway infrastructure. 5. Domestic freight volume will remain stable in 2014, and there is little room for growth. This has also limited the bidding for trucks of the Railway Corporation to a certain extent. 6. From 2013 to 2015, the company's revenue is estimated to be 2.4 billion yuan, 2.7 billion yuan and 3.4 billion yuan respectively, down 12%, 11.7%, and 27%, respectively. Net profit is 79 million yuan, 84 million yuan and 151 million yuan respectively, down 35.7%, increase 7% and 79.3% year on year, corresponding earnings per share are 0.26 yuan, 0.28 yuan and 0.5 yuan, and PE is 50 times, 46 times and 26 times. Given that China's railway construction is still in a period of rapid growth, the company is “recommended” rated as “recommended”. Risk warning: (1) The bid for the Railway Corporation fell short of expectations; (2) The railway freight market continued to be sluggish.