Abstract: The performance is in line with unanimous expectations, and Shanshui achieved net profit of 1,519 billion yuan in 2012, equivalent to a profit of 0.54 yuan per share, a year-on-year decrease of 32%. It is in line with ongoing expectations and slightly higher than our expectations. The gross profit per ton in 2012 was 72 yuan/ton, higher than our estimate of 67 yuan/ton. Sales volume was 67 million tons, up 3.5% year over year, in line with our expectations. We maintain our buy rating with a target price of HK$6.5. Different from popular perception: the gross profit of tons in the second half of 2012 was the same as the gross profit of tons in the second half of 2012, which was 72 yuan/ton, the same as in the first half of the year, but down 18 yuan/ton from the previous year. This is higher than our estimate based on the fact that in the second half of 2012, the price of cement including tax in Shandong and Liaoning fell by 33/12 yuan/ton compared to the first half of the year. We believe that better-than-expected gross profit per tonne benefited from falling coal prices and improved company cost control in the second half of 2012. In the second half of 2012, tonnage management expenses were 26 yuan/ton, higher than 8 yuan/ton in the first half of the year, but decreased by 5 yuan/ton over the same period last year. Operating cash flow was good, but net financial leverage increased sharply. Operating cash flow was in good condition: $1.93 billion, up 25% year on year. The number of accounts receivable and inventory days was 77/54, compared to 71/60 days in 2011. The net debt ratio rose to 143% from 126/109% in 1H12/2011. Valuation & Target Price: We maintain our buying rating with a target price of HK$6.50, corresponding to a price-earnings ratio of 7 times in 2013. Our gross profit per ton for 2013 is assumed to be 80 yuan/ton. For the fluctuation in cement prices of 5 yuan/ton, we expect a change in profit of 11% and a change in valuation of HK$0.7 per share. Catalysts for stock price performance: The higher-than-expected peak season rise in cement prices in March and the optimistic performance guidance at the annual report performance conference will be catalysts for the rise in cement stock prices. Investment risk: Further real estate regulation policies may suppress demand for improved first-hand housing in the short term, thereby affecting turnover and expectations for the commencement of new housing, and becoming a risk of falling cement stock prices.