The company released its 2014 annual report, achieving operating income of 702 million yuan, an increase of 6.26% over the previous year; realized net profit of 31 million yuan, a year-on-year decrease of 17.14%; and EPS was 0.16 yuan. 4Q achieved operating income of 253 million yuan, a year-on-year increase of 19.77%; realized net profit to mother of 13.361 million yuan, an increase of 7.83% over the previous year; and EPS was 0.1 yuan. The company has not paid dividends for 14 years. We believe that the company's performance growth rate is in line with expectations, and the main reasons for the decline in net profit due to: 1) The domestic economy is slowing down, the wine industry continues to be sluggish, and downstream demand for the company's bottle cap products is weak. In 2014, the company sold 2.29 billion anti-counterfeiting bottle caps, up 5.1% year on year; 2) The company's major winery customers reduced the purchase price of bottle caps through bidding, etc.: the company's comprehensive gross margin in 2014 was 20.57%, down 0.83 percentage points year on year. Among them, the gross margin of aluminum anti-counterfeiting caps was 30.46%, down 3.66 percentage points year on year, and the gross margin of combined anti-counterfeiting caps was 16.33%, down 5.16 percentage points year on year; 3) The company increased its market development efforts to promote the application of anti-counterfeiting bottle caps in other markets, leading to a decrease of 0.83 percentage points over the previous year Management expenses and sales expenses have increased. In addition, rising labor costs have also caused the company's management expenses to increase: the company's 14-year sales expenses rate was 3.67%, up 0.01 percentage points year on year; management expenses ratio was 8.12%, up 0.98 percentage points year on year; financial expenses ratio was 2.27%, down 0.46 percentage points year on year. With the development of the dual main business of anti-counterfeiting bottle caps+landscaping, Internet manufacturing and environmental protection are important directions in the future. 1) The company is the absolute leader in the anti-counterfeiting bottle cap industry. Currently, it has an annual output of more than 2 billion caps, 4 times the second place, with a market share of more than 10%, and multiple barriers to customer quality, production capacity, capital and technology. Affected by adjustments in the liquor industry in 2014, the growth rate of the company's bottle cap business has slowed. We judge that in the future, while continuing to adjust the bottle cap product structure, expand domestic and international market segments, and strengthen product quality, etc., the company will further utilize new thinking (such as the Internet, big data) to increase business model innovation, increase the stickiness of end consumers, increase the added value of bottle caps, and ensure the stable development of the bottle cap business. 2) The company completed the acquisition of Huayu Garden in '14, and realized the development of the dual main business of anti-counterfeiting bottle caps+landscaping. Huayu Garden is a comprehensive landscaping enterprise with a full industry chain covering landscape planning and design, garden engineering construction, planting and sales, and garden maintenance. In addition, the company's business scope also covers ecological restoration and municipal landscape greening projects, with obvious industry-leading integrated service advantages. The balanced development of municipal gardening business and ecological restoration business has laid a good foundation for the company's long-term development and reduction of operating risks. Additional issuance guarantees business development, and at the same time brings room for imagination for epitaxial mergers and acquisitions. The company recently announced that it plans to issue A-shares privately to 5 specific investors at an issue price of 11.15 yuan/share, no more than 60.9 million shares, and the total capital raised will not exceed 679 million yuan. After deducting the issuance fee, all will be used to supplement working capital. The main purpose is to promote the landscaping business of Lipeng Co., Ltd. and supplement daily working capital. The lockdown period for this private release is three years. We believe that the funds raised in this private offering can provide strong financial support for the development of the company's various businesses, improve the company's capital structure, reduce financing costs, and promote the rapid development of various businesses. Furthermore, we believe that the company has mergers and acquisitions and capital operation genes, and sufficient monetary capital after a fixed increase has also opened up room for imagination for the company to continue extending mergers and acquisitions in the future. Profit forecasting and valuation. Based on the current issuance of 60.9 million shares, we predict that the company's EPS will be 0.49/0.61/0.75 yuan after dilution in 2015-2017, giving the company 35 xPE in 2016, corresponding target price of 21.35 yuan, a “buy” rating. For more information, please see our in-depth report “Lipeng Co., Ltd. (002374) In-depth Report: 3.7 billion market cap lead+big data marketing+garden environmental protection 20150114”. Consumption of second- and third-tier liquor continues to decline; downstream beverage, medical and other customer development progress falls short of expectations.