Investment recommendations The company's stock price has continued to fluctuate since the beginning of the year. Currently, the P/E corresponding to 2014/2015 is 61x/53x. Currently, downstream demand for tantalum products is weak, and it will take time for new industries to contribute profits. The company's stock price lacks a catalyst in the short term, mainly fluctuates, and the rating is downgraded to neutral. Reason: Dongfang Tantalum achieved operating income of 2.87 billion yuan in 2013, +27.8% year-on-year, and net profit attributable to the parent company of 3.54 million yuan, equivalent to earnings per share of 0.008 yuan, or -96.6% year-on-year, lower than our expectations of 0.18 yuan. Among them, 4Q lost 0.04 yuan per share. The company plans to distribute cash dividends of 0.3 yuan (dividend rate of 373%) for every 10 shares to all shareholders. Comment: 1) Sales of tantalum wire and tantalum powder fell 3.3% year on year, average sales price -24.4%, and sector gross profit fell sharply by 14ppt to 16.6%; 2) The gross margin of silicon carbide in the new industry sector was corrected to +1.7%, but energy materials, titanium and titanium alloy products still lost money, with gross margins of -6.4% and -13.3% respectively; 3) the effective tax rate was 61.9%. Downstream demand for tantalum products is still weak, and prices lack upward momentum. Affected by weak downstream demand, the average prices of tantalum ore and tantalum metal have declined 33% and 18%, respectively, from 2013 since the beginning of the year. Looking ahead, since demand still lacks terminal market support and market transactions are light, buyers all have a wait-and-see attitude, and it is expected that short-term prices will lack upward momentum. It will take time for the new industry to reverse its losses, and the long-term prospects are yet to be seen. In addition to traditional tantalum, niobium, and beryllium materials, the company has also laid out three new industries, including titanium materials, photovoltaic materials mainly blade-grade silicon carbide and steel wire products, and emerging lithium-ion cathode materials. At the same time, the company will also intervene in the field of superalloys in due course. We believe that new industries are currently in a pattern where production capacity is overcapacity and downstream demand is weak. The short-term loss situation is difficult to reverse, and the long-term prospects are yet to be seen. Profit forecasts and valuations were lowered for 2014/2015 by 16%/12% to 0.16/0.19 yuan to 0.16/0.19 yuan to reflect the decline in the price of tantalum products since the beginning of the year. Assume that in 2014/2015, the price of tantalum products is -5%/-2.5%, product production +3%/+3%, and the processing cost of tantalum products +5%/+5%. Accordingly, the target price of A shares was lowered by 12% to 9.2 yuan (56x target P/E), and there is still room for 8% decline from the current stock price. Considering that the profitability of the company's tantalum-niobium business has declined, and it will take time for the new industry to reverse losses, the rating was downgraded to neutral. The price of risky tantalum products fell more than expected; the profit of the new industry fell short of expectations.