Investment suggestions The company has a rich technical heritage, has high-end wet power lithium battery diaphragm core technology, and the technical indicators of the pilot products have reached world-class standards. They are optimistic about the company's core diaphragm technology, and are optimistic about management improvements brought about by management changes. The market has yet to fully anticipate its power lithium battery diaphragm technology, and with individual lithium battery-related stocks hitting new highs one after another, the company has plenty of room to make up for growth. The company's 2014-2016 EPS is expected to be 0.12/0.15/0.22 yuan respectively, and the PE corresponding to the current stock price is 96.3/76.0/52.0 times, respectively, giving the company a “recommended” rating for the first time. Key investment points The traditional business is stable, and the company is seeking transformation by increasing the production of lithium batteries and photovoltaics: The company is one of the giants in the global color film sector, but due to the impact of digital cameras, the company's color film production has basically stopped. However, the color photo paper market has limited space and is growing slowly. In this context, the company began entering the solar cell backpanel industry many years ago, and recently it is planning to raise no more than 600 million yuan in capital for five projects, including the industrialization construction of high-performance lithium battery PE diaphragms and solar cell backpanels, to fully seek transformation. It has a rich technical heritage and has three core technologies to support the company's transformation: although the company's film business has basically come to an end, when it was involved in the film business, it had solid technical reserves and a strong R&D team. The company has three core technologies, including coating technology, particle technology, and film forming technology. Its three core technologies are in line with the wet lithium battery diaphragm process, so the company is expected to occupy a high technical position in lithium battery diaphragms. Backplane production capacity continues to expand due to the boom in the photovoltaic industry: the company began entering the solar cell backpanel industry in 2008, built the first backpanel production line, and then increased production capacity several times. After years of development, the quality of the company's backpanels is first-class in China. The products include single fluorine and double fluorine backplates, and the products include a complete range of products. It currently has 4 production lines, with an annual output of 10 million square meters, and revenue of nearly 200 million yuan last year. The backboard phase III production line with an annual output of 10 million square meters has also been completed and is awaiting formal inspection. The company has lofty ambitions. Under the industry boom, it plans to continue to build 3 production lines, expand production capacity to 35 million square meters, and is expected to become a leading domestic backboard enterprise. Having mastered the core technology of wet high-performance lithium battery diaphragms, future development is worth looking forward to: Currently, domestic low-end lithium battery diaphragm technology is mainly in the hands of leading foreign players. Through independent research and development, the company has mastered the core technology of wet high-performance lithium battery diaphragms. At present, the company's lithium battery diaphragm pilot product indicators have reached world-class levels, some indicators have surpassed foreign products, and the pilot products have been tested and approved by some downstream customers. This time, the company will invest more than 400 million yuan to build a 40 million square meter wet high-performance lithium battery diaphragm production line and a 17 million square meter lithium battery diaphragm coating production line through additional generation, and is expected to become a supplier of high-performance lithium battery diaphragms in the future. Risk warning: Risk that the progress of the lithium battery diaphragm project is lower than expected; there is a risk that demand for solar backpanels will be sluggish.