The investment proposal does not take into account capital dilution. The EPS for 2014 and 2015 is expected to be 0.35 yuan and 0.44 yuan, and the current stock price is 44.7 times and 36.3 times that of PE. Although the valuation level is high, considering that the company has many future expectations, it maintains the recommended rating. Key investment events: The company released its annual report, which should have amounted to 333 million yuan in 2013, an increase of 57.55% over the previous year; realized net profit attributable to shareholders of the parent company of 3.68 million yuan, an increase of 24.5% over the previous year; and realized net profit attributable to shareholders of the parent company after deduction of 21.31 million yuan, an increase of 77.68% over the previous year. Achieved a basic earnings of 0.24 yuan per share. The profit distribution plan is to send 3 shares to transfer 7 shares for every 10 shares, and distribute 0.8 yuan (tax included). The traditional business is stable, and the new energy business has led to a sharp increase in revenue: the performance is lower than our previous judgment, but it is in line with the revised performance report disclosed by the company on April 15. The main reason why the performance fell short of our expectations was that the return on investment in creditworthiness management fell short of expectations (contract revenue confirmation was delayed), and the profitability of the new energy business fell short of our expectations. The increase in the company's deducted non-net profit did not meet the exercise conditions of 200% of equity incentives. The protection business was affected by the slump in demand in downstream electricity, steel, cement and other industries. Among them, the HDS business achieved revenue of 80.48 million yuan, an increase of 12.12% over the previous year, but gross margin also fell to 31.55%. The revenue of the non-metal protection business fell 9.16%, and the gross margin remained high at 35.59%. Currently, the new energy business is mainly the waste heat power generation business, which achieved revenue of 104 million yuan throughout the year, which is the main driving force for the sharp increase in the company's operating income. However, due to the decline in the production capacity of new clinker in the cement industry, new demand in the waste heat power generation industry is weak, and the gross margin is lower than previous expectations, which is only 19.20%. The company's consolidated gross margin also fell to 24.36% (31.70% in 2012) due to this impact. Sales and management expenses were well controlled, with year-on-year increases of -18.22% and 3.92%, which affected the increase in operating profit to 30.98%. Operating capacity has improved: the balance ratio is 15.19%, the current ratio and liquidity ratio are 5.43 and 5.00, respectively, and the liquidity performance is excellent. The number of days of inventory turnover, the number of days of turnover of accounts receivable, and the operating cycle reached 80/251/331 days, respectively, a significant improvement from 134/320/453 days in 2012. However, since engineering contracts account for a large share of the company's revenue and working capital, the net profit to cash ratio is -0.82. The long-term scope of the protection and waste heat power generation business is considerable, and there are many highlights in other fields: the company has the comprehensive advantage of “materials+qualification+technology+service network” in the field of HDS protection. Despite the decline in downstream prosperity, the revenue scale in 2013 reversed the downward trend in 2012, and still maintained a market share of more than 20%. As industry concentration increases due to the elimination of backward production capacity downstream, the company's HDS share and profit level are expected to gradually increase. The protection needs of traditional industries will still be under some pressure in the short term, but in the long run, protection needs in emerging fields such as petrochemicals, non-ferrous metals, marine, and military industries are still impressive. In terms of waste heat power generation, what is more certain this year is that the Nanlou project will generate revenue from the commencement of production, and that the two major contracts of 120 million yuan signed by Xinli Zhuzheng at the end of 2012 are expected to contribute to good performance this year, thus continuing to drive the growth of the company's performance in 2014. In addition, the company's investment in other fields is worth paying attention to: the establishment of Heilongjiang Evergrande Hi-Tech officially confirmed that the company will enter the field of intelligent power saving and water purification, and it is expected that the fuel oil business will be the first to contribute to performance in 2014, and the intelligent power saving and water purification business still needs to continue to be integrated just until performance is released; in addition, the company plans to establish the Jiangxi Evergrande Precious Metals Trading Center, which, if successfully approved, will also make a good contribution to future performance. Risk warning: the risk that the downstream sector's protection requirements are lower than expected; the risk of accounts receivable recovery.