Investment highlights: We expect net profit attributable to parent company owners in 2014-2015 to be 200 million yuan and 370 million yuan, respectively, and EPS of 0.11 yuan and 0.20 yuan respectively. The integrated company market generally grants certain discounts on the basis of segment valuations. Under careful assumptions, according to a reasonable market value of 15.9 billion yuan, the reasonable stock price corresponding to the current share capital is 8.39 yuan. For the first time, coverage was given an “increase in holdings” rating. The core logic of our recommendation for Yatai Group is the transformation of its own industry cycle: in the last cycle (since its listing in 1995), Yatai achieved rapid expansion in strong cycle fields such as cement, real estate, and coal, and accumulated a high debt ratio. In the future, it will gradually adjust the industrial structure and capital structure: that is, deleveraging the asset structure (reduction in debt ratio), while increasing investment in the pharmaceutical industry, which has been cultivated over many years, to achieve a “shift” in its own industry cycle, and develop the pharmaceutical industry as a new pillar industry, and start a new cycle of traditional companies in the industry. The restructuring of the industry highlights “transformation”: our research shows that at present, the company's balance sheet mainly consists of traditional industries (cement, real estate) and other fields, and may “subtract” in the future. Although the pharmaceutical industry currently accounts for only about 7% of revenue, it has begun to have a complete industrial chain of R&D, manufacturing, and pharmacy chains, and has some competitiveness in the fields of traditional Chinese medicine and biological vaccines. Judging from the current layout and planning, the share is expected to increase dramatically in the future. Capital structure “deleveraging”: According to the company's fixed increase plan for October 2014, about 2.9 billion yuan was raised mainly to repay bank loans and supplement working capital. Furthermore, we judge that traditional business sectors such as cement and coal may be further adjusted in the future to achieve asset structure adjustments to the accumulated high debt burden of traditional industries. Risk warning: domestic currency and real estate macroeconomic policy risks.