Incident: On June 21, 2014, Mindong Electric Power announced that it signed a “Framework Agreement on Jointly Promoting Cooperation between Ningde Bauhinia Innovation Research Institute and Rare Earth Green Development” with Tsinghua University to jointly establish the Ningde Bauhinia Innovation Research Institute. Under the support and guidance of the Ningde Municipal Government, we will vigorously promote technological upgrading of the electric motor industry in Ningde City and drive the development of the rare earth materials industry. Comment: Combining downstream applications with upstream resources to promote the industrialization of rare earths. Fujian is a major rare earth province in the south, and its ionic rare earth reserves rank among the top three in the country. Motors made of rare earth permanent magnet materials have the characteristics of high energy efficiency, small size and light weight, and the scope of application covers the entire motor industry. Ningde not only has rare earth resources, but it is also an important production and export base for small and medium-sized motors in China. The local government attaches great importance to the development of the electric motor and electrical appliance industry in eastern Fujian, and formulated the “Notice of the Fujian Provincial People's Government on Measures to Accelerate the Development of the 100 Billion Electric Appliance Industry Cluster in Eastern Fujian” to promote its development. We believe that the establishment of this research institute can fully combine downstream applications with upstream resources to expand the dominant local industry. At the same time, Tsinghua University's Bauhinia Holdings also promised to assist the company or the project company formed by the company to apply for a rare earth mining license for the demonstration site. The diversification strategy progressed and expanded into the field of new materials. Since 2012, the company has entered the mining industry, but due to the slow recovery of the global economy and China's economic transformation, global mineral prices have continued to fall. In particular, the molybdenum ore market continues to be sluggish. Fuan Xindi Molybdenum Co., Ltd., which holds 20% of the company's shares, and Ningde Huansan Mining Company both lost money in 2013. The company stated that it will continue to advance the overall development strategy of “electricity as the main focus, related diversification”, avoid profit fluctuations in a single main business, and develop from a single power development and production to diversified direction such as real estate, mining, trade, and finance. The establishment of the Innovation Research Institute is a key step in the company's transformation into the field of new materials. Profit forecast and rating: Since the company has signed only a framework agreement, the execution and implementation of the project is still uncertain. The company maintained its 14-16 EPS of 0.22 yuan, 0.24 yuan, and 0.26 yuan, and continued to give it an “increase in wealth” rating. Risk factors: Precipitation dropped sharply, hydropower generation declined; real estate sales fell short of expectations; global economic decline, and metal prices fell.