In 2012, the company achieved operating income of 407 million yuan, a year-on-year increase of 0.87%; operating profit of 46.83 million yuan, a year-on-year decrease of 37.03%; net profit attributable to owners of the parent company of 42.68 million yuan, a year-on-year decrease of 36.36%; and basic earnings per share of 0.41 yuan. The distribution plan was to transfer 8 shares to 8 shares for every 10 shares, with a cash distribution of 0.50 yuan (tax included). The company's revenue is growing. The company's main products are cross-shaft universal couplings, drum-shaped gear couplings and cutting blades, which support medium and heavy plates, hot rolling and cold rolling; positioned in the middle and high-end markets, the company ranks first in the market share of couplings in the metallurgical industry. The company's revenue during the reporting period increased by 0.87% year on year. The main reason is that the company's main product, universal coupling, revenue fell 9.60% year on year to 196 million yuan, and the revenue of drum-shaped gear couplings increased 27.47% year on year to 141 million yuan. Overseas sales increase the company's overall gross profit margin. During the reporting period, the company's comprehensive gross margin was 39.68%, an increase of 3.12 percentage points over the previous year. Benefiting from cooperation with DANIELI CHINA, the company's international business increased sharply by 117.18%. As the gross margin of overseas orders was 47.27%, 7.87 percentage points higher than the gross margin of domestic products, the company's overall gross profit margin increased. The ability to control costs declined during the period. The company's expenses for the period in 2012 were 22.98%, an increase of 4.54 percentage points over the previous year. Among them, the sales expense ratio was 10.09%, an increase of 2.31 percentage points over the previous year; the management expense ratio was 12.71%, an increase of 1.06 percentage points; and the financial expenses ratio was 0.19%, an increase of 1.17 percentage points over the previous year. The company actively expands its product line and enhances profitability. In 2012, the company publicly issued convertible bonds to raise 320 million yuan to invest in the “hydraulic automatic precision reel project”, the “cold rolled main drive cross shaft universal coupling project”, and the “large size plasma spray welding wear-resistant composite skateboard project”. The construction period is 18 months. After production is put into operation, it will add 440 million yuan in revenue and 81.98 million yuan in total profit, which will further increase the company's low market position in the metallurgical parts supporting field; the company established an automobile transmission shaft project with initial revenue of 2 million yuan. The main customers include special vehicle manufacturers such as Valin Xingma, Yaxia Motors, CIMC Ruijiang, and Jianghuai Yangtian, which is an important part of the company's product diversification and is expected to become another new profit growth point for the company. Profit forecast. We expect the company's 2013-2015 EPS to be 0.72 yuan, 0.93 yuan, and 1.07 yuan. Based on the closing price of 17.16 yuan, the corresponding dynamic price-earnings ratio is 24 times, 18 times, and 16 times, maintaining the company's “neutral” rating. Risk warning: 1) The continued downturn in the steel industry has caused fund-raising projects to fall short of expectations. 2) The spare parts market is becoming increasingly competitive.