The 2012 results were slightly higher than our expectations. The company announced its 2012 annual report, with operating income of 3.03 billion yuan, a year-on-year increase of -34.63%, operating profit of 181 million yuan, a year-on-year increase of -18.61%, and net profit attributable to the parent company of 204 million yuan, an increase of -1.74% over the previous year. Net profit attributable to the parent company after deducting non-recurring profit and loss was 164 million yuan, an increase of -13.62% over the previous year. The fully diluted EPS was 0.24 yuan, slightly higher than our expectations. The decline in the prosperity of construction machinery and commercial vehicles has dragged down the company's engine sales. Affected by the domestic macroeconomic downturn, construction machinery sales declined sharply. Among them, excavators, loaders, bulldozers, and truck cranes fell 35.2%, 29.6%, 22.3%, and 36.6%, respectively. Sales of commercial vehicles totaled 3.27 million units, a year-on-year decrease of 7.5%. The company sold 64,000 diesel engines, a year-on-year decrease of 36%. Among them, sales of diesel engines for supporting construction machinery, trucks, ships, power plants, and export markets have declined, while sales of diesel engines for supporting buses have increased significantly. As commercial vehicle engine fund-raising projects are put into operation one after another, the company's diesel engine sales are expected to reach 77,000 units in 2013, an increase of about 20% over the previous year. Increased gross margin and government subsidies enhance the company's profitability. In 2012, the company's gross margin was 20.63%, up 0.77 percentage points from the same period last year, mainly due to the company's promotion of lean production and lower costs. The fee rate for the period was 14.79%, up 0.12 percentage points from the same period last year. Among them, the sales expense ratio decreased by 0.26 percentage points compared to the same period last year, mainly due to a reduction in product warranty costs; the management fee rate increased 1.11 percentage points over the same period last year; and the financial expense ratio decreased by 0.72 percentage points from the same period last year, mainly due to an increase in interest income. The company received a government subsidy amount of 37 million yuan, a significant increase over the same period last year, mainly because the company's fund-raising projects received government support funds. The increase in gross margin and the increase in government subsidies raised the company's net interest rate to 6.56%, 1.2 percentage points higher than the same period last year. Investment advice: Maintain a “buy-A” investment rating, with a target price of 16.5 yuan for 12 months. As the company's fund-raising projects were put into production in 2013 and the construction of the company's passenger car diesel engine project progressed, we believe its future profitability will continue to improve. The company's revenue growth rates for 2013-2015 are expected to be 24.5%, 65.5%, and 49.2% respectively, net profit growth rates of 23.2%, 49.6%, and 41.2% respectively, and fully diluted EPS of 0.29 yuan, 0.42 yuan and 0.6 yuan respectively. Maintaining the company's “buy-A” investment rating, the target price for 12 months is 16.5 yuan. Risk warning: The sales volume of newly launched engines fell short of expectations; the incentive policy to ride diesel fell short of expectations.