Incident: Jinxi Axle released its 2013 three-quarter report on the evening of October 28, 2013, showing that from January to September 2013, the company achieved operating income of 1.667 billion yuan, a year-on-year decrease of 21.75%; net profit attributable to shareholders of listed companies was 71.827 million yuan, a year-on-year decrease of 19.77%, EPS 0.23. After deduction, net profit attributable to shareholders of listed companies was 3774.0.01 million yuan, a year-on-year decrease of 57.29%. The performance fell short of expectations, and we are waiting for the delivery of orders from the Railway Corporation in the fourth quarter. From January to September 2013, the company's operating performance fell short of expectations, mainly due to delays in bidding by the Railway Corporation. Production and sales of the railway vehicle business experienced a sharp year-on-year decline in the first half of the year. It wasn't until the third quarter that it slowly recovered. The decline slowly narrowed, waiting for the delivery of the first phase of the 2013 order of the Railway Corporation in the fourth quarter. Overall gross margin declined slightly. From January to September 2013, the company's comprehensive gross margin was 11.08%, down 0.11 percentage points from the same period last year. The overall price of trucks tendered by the Railway Corporation in the first phase of 2013 was lower, which affected the company's gross profit margin. The company only minimized the risk of price decline through internal cost control. The cost rate increased sharply during the period. From January to September 2013, the company's expenses rate for the period was 8.21%, an increase of 2.02 percentage points over the same period of the previous year, due to a sharp increase in management expenses. During the reporting period, the company's management expenses ratio was 6.11%, an increase of 1.35 percentage points over the previous year. The main reason was the increase in R&D expenses, depreciation expenses, and employees' wages. The company completed additional issuance in August of this year, raising 1.261 billion yuan in capital, effectively relieving the company's financial pressure, and financial expenses will be drastically reduced for some time to come. Localization of high-speed rail moving hollow axles increases valuation. Premier **** recommended high-speed rail in Thailand earlier, and promoting high-speed rail to overseas markets is the first step in the domestic high-speed rail industry's strategy. As a core domestic railway equipment parts enterprise, the company is expected to benefit in the high-speed rail industry chain. Currently, Jinxi Axle is cooperating with Tsinghua University to actively promote research and development on the localization of hollow shafts for high-speed rail trains, and a major breakthrough has been achieved. The high-speed rail EMU hollow axles developed by the company have been successfully tested in terms of performance and fatigue tests, and loading tests will begin. It is expected that domestic high-speed rail EMU hollow axles will be used in segments on the Shanghai-Kunming Line in 2014. The company will be the biggest beneficiary, which will help improve the company's valuation and performance, and achieve a double hit for Davis. Maintain an “Overweight” rating. After additional distribution, we expect the company's 2013-2014 EPS to be 0.33 yuan, 0.47 yuan, and 0.58 yuan, respectively, and the corresponding dynamic PE is 44.94X, 31.43X, and 25.53X. Considering that the company is the only listed company for key components of domestic railways, it maintains an “increase in holdings” rating. Risk warning: The macroeconomy continues to be sluggish, and the Railway Corporation's order delivery falls short of expectations