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　　 Changjiang Securities

Event description:

1. Zhejiang Fuchunjiang Hydropower Equipment Co., Ltd. (hereinafter referred to as the "Company") received the Letter of Acceptance for the main engine package of Kirnati Weir and HEPP Hydropower Station Project and the electrical and installation package of Khelvachauri I Weir and HEPP Hydropower Station Project from ACHAR ENERGY 2007 on December 6, 2012, We were notified to confirm our company and Zhefu Hydropower International Engineering Co., Ltd. as the successful suppliers (Zhefu Hydropower International Engineering Co., Ltd. is a subsidiary of our company). The total amount of this bid winning is USD9723694 (about 60.55 million yuan), accounting for 5.71% of the company's operating revenue in 2011. The company's delivery according to the manufacturing schedule will increase the company's sales revenue and net profit in 2013-2014.

2. Total bid winning amount: USD21582927 (about 134389300 yuan).

3. Time and place of delivery: Time and place of delivery: delivery in batches. It is expected that all deliveries will be completed by October 2014. The place of delivery is the port of Batumi, Georgia.

Event comment:

Just after December, the company received another 134 million new orders, which has a great support for boosting market confidence. In November this year, the company announced two small orders in succession. Our view remains unchanged: December 2012 is quite critical for Zhefu. If there are still orders of moderate scale released in the middle and late December, we believe that the market will turn its expectations for Zhefu in 2013, and Zhefu's ability to receive orders will be fully recognized by the market. At that time Zhefu Shares When the share price soars.

The company officially obtained the approval document for additional issuance in November, which means that the company must issue at a minimum price of 6.45 yuan before next May. We still believe that Zhefu has made great efforts in the market for additional issuance. Due to the fact that there are few new projects in China this year, the company can only rely on overseas projects this year. The difficulty for the company to complete the additional issuance depends on whether the company can have new orders and order amount. The greater the amount of new orders, the less difficult it is to complete the additional issuance. We are confident in the company's ability to take new orders before issuing additional ones.

As we said before, the nuclear power business was determined by the Announcement Company in May last year and the capital increase was completed in March this year. We will make a prototype this year, and work hard for the control rod drive mechanism of small reactors and megawatt machines in the future.

The issuance of nuclear power equipment manufacturing qualification by the Ministry of Environmental Protection will be an important catalyst for the company's share price.

The sales revenue of small and medium-sized hydropower manufacturing and special motor projects is expected to grow steadily this year.

Excluding nuclear power business, we estimate that the EPS will be 0.32 yuan and 0.41 yuan respectively from 2012 to 2013, corresponding to 16 times and 13 times of PE respectively. Considering the high gross margin order income brought by the nuclear power qualification approval next year, we believe that the performance next year is likely to exceed our current forecast value, and maintain the "recommended" rating.

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