Report summary: The company's development strategy is transforming from a component supplier to a complete equipment supplier combining one and two equipment. The company mainly produces medium voltage power distribution equipment. Before going public, it mainly faced customers in the form of components. The three products of C-GIS ring network cabinets, prefabricated cable accessories, and SMC boxes had a leading position in the segment, but the product structure was relatively uniform. The company's listing was vertically integrated and extended in the industrial chain, increasing the box transformer and switch package business during the period, and actively expanding the railway rail transit sector and the major customer market in the industry downstream to disperse dependence on grid customers. The company continued to invest heavily in R&D for many years, thus establishing core advantages in product grade positioning, core component self-supply, production costs and quality control. The company's sales scale includes the number of marketers and channel construction. It may not have an obvious advantage over its peers in other listed medium voltage distribution companies, but the company's R&D investment in revenue as well as the company's overall gross margin are significantly higher than that of its peers. In terms of product positioning, the company focuses on import substitution markets, complete production processes, self-supply of core components, high degree of automation of production equipment, and advanced process design, all of which have great characteristics and competitiveness. The company's forward-looking R&D layout is reflected in the introduction of the Shanghai Shenrui team, so it has complete technical reserves for one and two integrated technologies. The company's fund-raising projects have been put into operation one after another this year, and there have been significant increases in production capacity and production efficiency. In particular, the subsequent development and promotion of C-GIS products is still worth looking forward to. The three fund-raising projects at the company's Fuqing base have been tested and put into operation in February and September of this year, solving the production capacity bottlenecks of previous years. The production capacity of C-GIS, the company's core strength product, is expected to be 3-4 times that of the original, and the process upgrade and automation level of processing equipment have also improved significantly, ensuring that the product has a large-scale foundation from the perspective of production efficiency and cost control. At the same time, the company is also actively preparing for the product's entry into the field of high voltage levels and solid insulation ring cabinets from an R&D perspective. Profit forecasts and investment advice. The company's qualification certification issues in the power grid market this year had an impact on winning the bid. The slowdown in execution of railway orders, combined with relocation and asset impairment factors, had an impact on 2012 performance, but at present, a reversal inflection point has basically been established. The company's revenue growth in 2012-2014 is expected to be -0.62%, 30.73%, and 26.96%, respectively. The corresponding EPS is 0.30, 0.41, and 0.57 yuan, and the corresponding PE is 28 times, 20 times, and 15 times. Maintain a “careful recommendation” rating based on valuation levels. Main risk: Poor future market development causes idle production capacity