Summary of the report:

Semi-annual report summary. The company released its semi-annual report for 2013. During the reporting period, the company's total operating income was 2.925 billion yuan, an increase of 8.91% over the same period last year; operating profit was 50.7664 million yuan, with a total profit of 53.22 million yuan; and the net profit belonging to shareholders of listed companies was 4.6584 million yuan, down 39.63%, 37.65% and 83.99% respectively over the same period last year. Basic earnings per share were 0.013 yuan, down 84.03% from the same period last year.

The growth rate of operating income rebounded, and the comprehensive gross profit margin increased slightly by 0.33 percentage points. The company's performance rebounded in the second quarter, achieving a rebound in business growth of 8.91% in the first half of the year. In the first half of 13 years, the company's comprehensive gross profit margin was 13.36%, a slight increase of 0.33% over the same period last year, of which the gross profit margin of the construction machinery sector fell 2.52% from the same period last year, seriously swallowing up the growth space of the company's comprehensive gross profit margin.

During the period, the expense rate increased by 1.43%, mainly due to the increase in sales expense rate. In the first half of 2013, the company's sales expense rate, management expense rate and financial expense rate were 7.31%, 2.78% and 1.09% respectively, representing a change of 1.35%, 0.53% and 0.45% respectively over the same period last year. The expenditure rate during the period was 11.26%, an increase of 1.43 percentage points over the same period of 12 years. The increase in the rate of sales expenses is mainly due to the corresponding increase in maintenance and three packages of service fees, travel expenses, business hospitality expenses and other expenses.

The proportion of minority shareholders' equity is too large and the net profit is diluted to the parent company. During the reporting period, the company's net profit was 28.9018 million yuan, the minority shareholders' rights and interests were deducted by 24.2434 million yuan, and the net profit attributable to the shareholders of the listed company was 4.6584 million yuan. This is due to the previous expansion of the company through subsidiary cash acquisition of shares in Sun Company, resulting in an increase in minority shareholders' rights and interests, which in turn reduced the net profit belonging to the parent company. The company has changed its development mode from extension expansion to connotative development, which mainly includes two aspects: one is to enhance the profitability of subsidiaries and Sun Company, and the other is to further increase the share of equity.

Profit forecasts and investment advice. In the second half of the year, the performance of the construction machinery business is not optimistic due to the dual factors of the slowdown in macroeconomic growth and the cyclical adjustment of the industry. at the same time, the government subsidy has been overdrawn in the first half of the year, and the subsidy will be reduced in the second half of the year. We expect the company's 13-14 EPS to be 0.025, 0.05RMB, downgrading the company to "overweight" rating.