Grid/cost/inventory: The average sales price in February 2013 decreased by about 20 yuan/ton year on year, and returned to the same period in 2012 in March. Due to lower coal costs, sales costs in 2013 fell by 10-20 yuan/ton year on year. Management expects Shandong's gross profit to rise in 2013. The addition of production capacity in Shanxi in 2013 may reduce overall gross profit by 10-20 yuan/ton. Because of the mountainous terrain in Shanxi, the addition of production capacity lines will not suppress cement prices in other regions. Management stated, “The price of cement in Shanxi is 30-50 yuan/ton lower than in Shandong, but coal prices in Shanxi are also lower, so the gross profit in Shanxi is sometimes higher than in Shandong.” The company's current inventory level is around 60%. Sales volume/production capacity: Management conservatively estimates that the sales target for 2013 is 52-60 million tons (45 million tons in Shandong and 15 million tons in Liaoning), compared with the sales volume of 56.9 million tons in 2012. By the end of 2013, production capacity is expected to reach 52.9 million tons, and concrete production capacity will reach 20 million square meters. What material production capacity was added in 2013: Shandong 3.6 million tons, and Liaoning 5 to 7 million tons. Management does not expect the additional production capacity to put pressure on cement prices. Beginning in 2014, capital expenditure will fall from 44/4 billion in 2012/13E to the level of 2 billion dollars. Of capital expenditure in 2013, 3 billion yuan will be used for new line construction, while 1 billion yuan will be used for mergers and acquisitions. The acquisition cost rose to 450 yuan/ton in 2011, but after a low profit baptism in 2012, it has now dropped to 400 yuan/ton. Financial conditions: The long-term net debt ratio target is total debt/profit before tax, interest, depreciation and amortization to be less than 3.5 times. Shanshui's concrete accounts receivable in the Shandong region are better than the industry average; the company uses cash on delivery for most of its concrete business, and only targets government projects and large-scale developers on credit. The dividend rate will remain at the level of 30-35%. Currently, Shanshui still has 6 billion yuan of bank credit that has not been used, and an additional 4 billion yuan of bank credit is being approved. Demand outlook: Management is optimistic about sales prospects in 2013, especially infrastructure. Management said that more projects are currently being tendered and that more infrastructure projects will commence in the second half of 2013. Rural/infrastructure/real estate demand accounted for 20/45/ 35% of landscape sales, respectively. Kiln shutdown & others: The kiln shutdown plan for 2013 will be similar to 2012, with Shandong shutting down kilns for 2-3 months and Liaoning for 4 months. The environmental protection department requires existing production lines to be below 420 mg/m3 for nitrogen oxide emission standards, and less than 320 mg/m3 for new lines. Currently, all of Shanshui's production lines meet the standards, but the new line will require additional equipment installation to meet the standards. Each line of equipment installation will cost 2.5 million yuan and take one month.