The downstream environment of the hottest construc

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The downstream environment of construction machinery is expected to improve in the second quarter. Last week, Liugong, Shantui, Shanhe intelligent and other construction machinery companies announced the performance forecast for the first quarter of 2012, and the net profit fell by more than 50% year-on-year. Due to the rise of fixed costs and three expenses, the performance of listed companies fell significantly faster than the overall sales volume. According to BMW, the stock trend of related companies is expected to decline. We believe that the current valuation of the construction machinery sector is close to the level at the bottom of the previous two macro-control industries, and there is little room for decline. In the future, as the fiscal and monetary policies continue to be pre adjusted and fine tuned, the downstream environment of construction machinery will begin to improve in the second quarter. With the recovery of the industry environment and the start of the inventory replenishment cycle of downstream agents, the construction machinery sector is expected to usher in a moderate rebound in the second quarter. We continue to maintain the "recommended" rating of the construction machinery industry in Australia and African countries. We suggest paying attention to the leading enterprises in the construction machinery industry: Sany Heavy Industry, Zoomlion Heavy Industry, etc

2. Coal investment remains high, and the demand for coal machinery is strong. In the first quarter of 2012, the fixed asset investment in the coal mining and washing industry was 54.62 billion yuan, a year-on-year increase of 35%, 15.7 percentage points higher than the growth rate in the same period last year. Among them, the investment in March was 37.95 billion yuan per month, with a year-on-year increase of 41%. The industry investment continued to improve the testing of any cable failure. As the main mining equipment, the demand for coal machinery is stable. We expect that the annual growth rate of coal machinery industry in 2012 is expected to reach 25%, and more than 20% during the "12th Five Year Plan". We will continue to recommend Linzhou heavy machinery, Tiandi technology, etc

3. Huibopu (002554): an expert in oil and gas processing equipment going global. 1) PetroChina Iraq Rumaila oilfield began to strengthen construction this year. PetroChina plans to build 11 central processing stations, and the equipment demand related to the company is 100 million. 2) The company has established contacts with Russia's second and third largest oil companies. Russia's oil fields in Iraq have hundreds of millions of separation equipment orders that are ready to be delivered to the company. 3) Large orders for oily sludge treatment equipment may be formed this year and next. 4) Last year, the subsidiary Optus automation system expanded well in the photovoltaic industry, and will bring orders of million to the company every year in the next few years. 5) The company intends to expand the industrial chain. The weight of each batch is no more than 60 tons, including actions in gas processing, upstream resource development (oil, shale gas) and other fields. It is estimated that the annual EPS of the company will be 0.6460, 0.8885 and 1.2013 yuan respectively, and the PE corresponding to the current share price will be 22.05x, 16.08x and 11.83x respectively, which will be covered for the first time and given a "recommended" rating

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