Industry since early two grade market performed better than the big city. Mechanical equipment so far this year rose 20.87%, strong in the A market in 16.18%. Petroleum and natural gas equipment, construction machinery, refrigeration and ventilation equipment sub sectors is weak in the big city, is the main industry boom is still in the doldrums, corruption and other factors; the other 9 segments of the industry strong performance in the big city, especially the intelligent automation, aerospace equipment and Light Industry Machinery Industry during the 3 sub rose more than 40%, mainly is the robot the transformation of manufacturing industry, military industry and other theme market high enthusiasm.

Income growth is positive, narrowing profit growth decline, subdivision industry differentiation. 2014 on the growth of machinery and equipment industry in the first half of the attribution of the parent company net profit year-on-year -15.3%, compared with the same period of 2013 -35.2%, decline narrowed; year-on-year revenue growth of 3.46%, compared to the same period last year -10.2% improved significantly. Watch industry, relatively strong period for construction machinery, heavy machinery, coal equipment sub industry remains sluggish, but by the macro-economic impact of relatively small oil and gas equipment, intelligent automation equipment and instrumentation sub industry is performing well, another railway equipment and ship port equipment obvious recovery.

The gross profit of the industry fell. 2014 mechanical equipment industry in the first half of the gross profit rate is 19.28%, a decrease of 0.2 percentage points year-on-year. Gross margin year-on-year decline sub sectors obvious for engineering machinery, light industrial machinery, machine tool equipment, refrigeration and ventilation equipment and oil and gas equipment.

Cost rate rose, weakened the profitability. 2014 on the machinery and equipment industry during the first half of the cost rate of 13.42%, an increase of 1 percentage points: the cost of sales rate of 3.92%, an increase of 0.12 percentage points; the management fee rate is 7.96%, an increase of 0.51 percentage points; the financial cost rate of 1.54%, an increase of 0.37 percentage points.

Inventory and accounts receivable turnover still have cash flow pressure, compared to the same period no improvement. The first half of 2014 years mechanical equipment plate inventory turnover rate of 1.1, unchanged from the same period last year, but there are 9 sub industry year-on-year decline; accounts receivable turnover rate is 1.23, decrease compared to the same period 0.09; operating net cash flow net / business income is -8.27%, for a net outflow, although related to seasonal, but compared to the same period last year -7.29%, the increase of pressure operating cash flow.

Investment strategy: relatively strong cycle of traditional sub sectors such as construction machinery, heavy machinery, coal machinery, in fixed asset investment growth continued to decline and other macro background, still in a slow recovery; by the policy driven, less affected by the macro - economic, have greater development potential of the sub sectors such as oil and gas energy equipment, intelligent automation equipment, environmental protection and related equipment sub sectors will continue to be the focus of some enterprises, machine tool equipment and light industry machinery and other industries through M & a business transformation will also receive the attention of the market.

Risk tip: the downstream demand recovery is slow; industry competition; the rising costs of raw materials.