Key events in the report describe Jiangsu Tongrun released its annual report today. During the reporting period, the company achieved operating revenue of 892 million yuan, an increase of 7.19%; operating costs of 699 million yuan, an increase of 7.35%; realized net profit attributable to the parent company of 44 million yuan, a year-on-year decrease of 0.69%; and achieved EPS of 0.18 yuan. Among them, revenue for the fourth quarter was 249 million yuan, up 24.54% year on year; operating costs were 195 million yuan, up 24.81% year on year; net profit attributable to the parent company was 0.09 million yuan, up 18.27% year on year; EPS for the fourth quarter was 0.04 yuan, and 0.06 yuan for the third quarter. Incident review Overall operations were stable, and increased competition did not benefit from falling raw material prices: Overall, the company's operations remained stable in 2012. In terms of revenue, annual revenue increased 7.19% year on year: 1. The main domestic products, high and low voltage switch cabinets and electrical components, benefited from domestic transmission and distribution grid construction, with revenue up 17.49% and 47.36%, respectively; 2. The main export product tool cabinet had a decline in orders due to sluggish foreign demand, and revenue declined year on year; the sheet metal products business benefited from the release of production capacity from fund-raising projects, and revenue increased 21.86% year on year. In terms of profitability, with prices of major raw materials falling, the company's gross margin remained stable throughout the year: 1. The main export products, tool cabinets and sheet metal products, were affected by sluggish foreign demand, and industry competition intensified, and the order cycle contracted, so gross margin did not significantly benefit from falling steel prices, and gross margin increased less year-on-year; 2. The high and low voltage switch cabinet business market competition was sufficient, and product gross margin fell from 23.96% to 21.26%, limiting the company's profit improvement. In 2013, the subsidiary Tongrun Switch Factory introduced a unilateral cash capital increase of 5.3 million yuan from Dingrun Asset Management Company. After completion, Dingrun Asset held 34.64% of Tongrun Switch's shares. Since Dingrun Asset's shareholders are all Tongrun Switch managers and key employees, the deal is essentially an equity incentive, which will help stimulate management enthusiasm. Main business was stable in the fourth quarter, and net profit declined slightly month-on-month due to impairment losses: the company's operating income increased 14.20% month-on-month in the fourth quarter: 1. In the case where both domestic and foreign economies stabilized, the company's order situation may have improved; 2. Considering the decline in inventory inventory, concentrated order confirmation was the main reason for the month-on-month increase in revenue in the fourth quarter. While overall gross margin remained stable in the fourth quarter, revenue growth led to a month-on-month improvement in gross profit, but due to the increase in three expenses and impairment losses, the company's net profit declined month-on-month in the fourth quarter. It is expected that industrial restructuring will bring further profit growth: the 100KW photovoltaic inverter product jointly developed by the company and the Photovoltaic System Engineering Research Center of the Ministry of Education has obtained the Golden Sun certificate issued by CQC and obtained production qualifications; the 500KW photovoltaic inverter has also passed the CQC certification test. Entering the new energy industry will further improve the company's product structure and bring new long-term growth points to the company. The company's 2013 and 2014 EPS is expected to be 0.18 yuan and 0.17 yuan respectively, maintaining the “recommended” rating.