The company expects that from January to September 2014, the net profit attributed to shareholders of listed companies will increase by 400% RMB450% compared with the same period last year, with a corresponding net profit level of about 5640-62.04 million yuan and EPS about 0.06 yuan.

The quarterly results are expected to increase by 400-450%, verifying the logic that the company will achieve a substantial reversal in performance during the industry recovery period. The company's business model determines that it has strong performance flexibility. After exceeding the break-even point, the marginal gross profit margin of the company's casting products will increase significantly with the increase in output. With reference to the company's reported situation, the increase in net profit after deduction in the first three quarters may be higher than the overall performance growth rate. We expect the company's casting production to increase by about 40% year-on-year in 2014, which will lead to a significant reversal in the company's performance.

Downstream expansion of wind power operation business opens room for the company's long-term market capitalization growth. At present, wind farm operation has become the most prominent profitability link in the upstream and downstream of the wind power industry chain, and the gross profit margin (more than 40%) is significantly higher than that of equipment manufacturing (about 20%). At present, the internal rate of return of wind farm projects is between 10-20%, providing a long-term stable and attractive return on funds. The synergy between the new business and the original business is significant, which helps to maximize business value. The company is involved in the wind power operation business, and the existing customers will become the suppliers of the wind farm projects, that is, the company will become the "customers of the original customers". This will not only help to strengthen the relationship between the company and the upstream and downstream of the industrial chain, but also enhance the bargaining power of the original casting business, which is expected to maximize the overall profit space of the upstream and downstream of the industrial chain. It is suggested that we should focus on the implementation progress of the company's follow-up wind power operation project.

Maintain earnings forecasts and buy ratings. We expect the company to achieve earnings per share of 0.17,0.23 and 0.29 yuan in 2014-2016, with a compound growth rate of about 143% in 2013-2016 and 32% in 2014-2016, which currently corresponds to 34 times PE in 2015. We suggest that we should pay attention to the performance flexibility of the company in the industry recovery cycle, and be optimistic about the performance and valuation brought about by the downstream wind power operation, so as to maintain the buy rating.