Summary of this issue: Yangzi New Materials: China's leading supplier of organic coated boards. The main business of Yangzi New Materials is R&D, production and sales of organic coated boards and substrates. As one of the first private enterprises in China to enter the organic coating board industry, the company has mastered the key technologies and processes for the production of functional organic coated boards such as high cleanliness, antistatic, and high toughness and stain resistance, and is a national high-tech enterprise. Optimistic about the development prospects of functional organic coating boards. At present, the domestic supply of ordinary organic coated boards exceeds demand, and competition for homogenization will still be intense in the future. Functional boards benefit from the upgrading of the domestic industrial structure and the construction of strategic emerging industries. Market demand is showing a rapid upward trend. Their share of organic coated boards is expected to reach 32% in 2015, an increase of 14 percentage points over 2011. The company's product structure was upgraded to seize the high-end market. The company currently has an organic coating board production capacity of 80,000 tons/year and a substrate production capacity of 200,000 tons/year. After the fund-raising project is completed, it will add 220,000 tons/year of functional organic coated board production capacity. The company's “substrate-organic coated board” production chain will be further improved, and the existing product structure will also be optimized and upgraded. Due to the high gross margin of functional boards, the company's performance is expected to gradually improve as their share of revenue increases. Profit forecasts and investment ratings. We forecast the company's diluted EPS for 2013-2015 to be 0.26 yuan, 0.35 yuan, and 0.48 yuan, respectively. Judging from the other 4 listed new building materials companies we selected, the average PE in 2013 was 41X. Considering the leading position of Yangzi New Materials in functional organic coated boards and the high probability of performance improvement in the next few years, we believe that the PE given to the company in 2013 38X is quite reasonable, and the corresponding target price is 9.88 yuan. For the first time, coverage was given an “increase in holdings” rating. Stock price catalysts: product price increases; performance increases dramatically. Risk factors: the economy is running downwards, downstream demand is slowing down; production line construction is lower than expected; accounts receivable have increased significantly.