Incident: On August 27, 2014, Mindong Electric Power released its semi-annual report. In the first half of the year, the company achieved main business revenue of 436 million yuan, a year-on-year decrease of 42.66%; net profit attributable to shareholders of listed companies was 486.58 million yuan, a year-on-year decrease of 11.45%; basic earnings per share were 0.13 yuan, which was in line with expectations. Comment: Hydropower generation has increased and feed-in tariffs have increased profits in the hydropower sector. Affected by increased precipitation, hydropower generation was 606 million kilowatts, up 13.58% year on year, and hydropower sales volume was 593 million kilowatts, up 13.83% year on year. Since costs in the hydropower sector are relatively fixed, the increase in electricity sales has had a positive impact on profits. Affected by reduced air volume and power restrictions, wind power generation was 46 million kilowatts, a year-on-year decrease of 19.28%, and wind power sales volume was 44 million kilowatts, a year-on-year decrease of 19.35%. Due to the low share of wind power, the decrease in electricity sales had little impact on performance. Increased precipitation led to a 5.72 percent year-on-year increase in gross margin of the electricity sector to 52.3%. Since the subtropical high pressure level is eastward this year, there is a lot of precipitation in the south, and the profitability of the hydropower sector has increased. Coupled with the increase in hydropower sales prices starting in June, the hydropower sector's profit in the second half of the year is expected to be better than in the first half. The volume of real estate sales and trade operations declined. The company has two subsidiaries engaged in the real estate business. The main sales projects are the “Mindong International City” project of Wuhan Chudu Real Estate Company and the “Taili Garden” project of Ningbo Dongsheng Real Estate Company. Sales of the “Taiyi Garden” project were basically completed, so real estate sales revenue decreased by 32.89% year on year. The business volume of the trade sector decreased by 85.41% year on year, causing the subsidiary Ningde Huansan Industrial Company to lose 9.028,600 yuan. Diversified investment is progressing, but it is difficult to make a profit contribution in the short term. In order to avoid profit fluctuations in a single main business, the company transformed into a diversified field, and progress has been made in the mining industry and the new materials sector. However, the four prospecting rights owned by Huansan Mining are still in the survey stage, and it will take some time before they are converted to mining rights; it is difficult to establish an innovation research institute with Tsinghua University's Bauhinia Holdings, making profitable contributions in the short term. Profit forecast and rating: The company's EPS is expected to be 0.22 yuan, 0.24 yuan, and 0.26 yuan in 14-16, maintaining an “gain” rating. Risk factors: Precipitation dropped sharply, hydropower generation decreased; real estate sales fell short of expectations; mining consolidation was slower than expected.