Event: The company released its 2012 annual report today. The company achieved operating income of 314 million yuan during the reporting period, an increase of 46.77% over the previous year; net profit attributable to shareholders of listed companies was 37.84 million yuan, an increase of 45.97% over the previous year, and earnings per share of 0.38 yuan. The 2012 profit distribution plan is to transfer 12 shares to increase every 10 shares and distribute cash of 1.0 yuan for every 10 shares. Comment: The performance exceeded expectations and grew rapidly. In 2012, the company's operating income and net profit attributable to shareholders of listed companies increased sharply year-on-year, significantly faster than the increase in the previous year, and better than our previous forecast. The main reason for the rapid increase in performance is the signing of large orders for the building intelligence business. The total amount of new orders signed by the company in 2012 was 478 million yuan, an increase of 50% over the previous year. However, the cumulative amount of new contracts signed in the first three quarters had reached 432 million yuan, and there were few new orders signed in the fourth quarter. Revenue from building intelligence and rail transit businesses is growing rapidly. In 2012, the company's intelligent building business revenue was 244 million yuan, an increase of 80.04% over the previous year, accounting for 77.7% of total revenue. The main reason was the large amount of newly signed intelligent construction projects. Among them, only the Hengqin Island Macau University's new campus project contributed 128 million yuan in revenue this year (total amount of 196 million yuan). In addition to the Hengqin Island Macau University project, the intelligent building project also signed a new 264 million yuan. From this, it is estimated that the business is expected to continue to grow rapidly in 2013; the revenue from the urban rail business was 61.46 million yuan, an increase of 71.7% over the previous year, but the amount of new contracts signed was only 17.88 million yuan; in addition, due to the impact of national policies, project bidding was delayed, and other business revenues such as intelligent water resources and railway informatization all declined sharply. Gross margin has declined, and sales expenses are better controlled. The company's consolidated gross margin in 2012 was about 22.67%, down about 4.77 percentage points from the same period last year. Gross margin continued to decline (33.7% and 27.4% in 2010 and 2011, respectively) due to rising labor costs and raw material costs; the ratio of sales expenses and management expenses to operating income was 3.16% and 5.75%, respectively, down 1.95 and 2.67 percentage points from the same period last year. Profit forecast: We believe that at present, many cities in China have proposed strategic goals to build smart cities. Coupled with the acceleration of urbanization, the company's intelligent construction business prospects are relatively optimistic in the next few years; in 2013, domestic urban rail transit construction investment will continue to grow rapidly, and the company's urban rail transit business is also expected to develop rapidly. We estimate that the company's operating income from 2013 to 2015 was 431 million yuan, 558 million yuan and 701 million yuan respectively, up 37.23%, 29.57% and 25.66%, respectively. Net profit attributable to shareholders of listed companies was 4722 million yuan, 6.05 million yuan and 72.84 million yuan respectively, and earnings per share were 0.47 yuan, 0.60 yuan, and 0.73 yuan respectively. Currently, the price-earnings ratio corresponding to the stock price is 46 times, 36 times, and 30 times, respectively. There is no rating yet. Risk factors: Decline in business gross margin.