Incident: The company released its 2014 semi-annual report. In the first half of the year, the company achieved revenue and profit of 950 million yuan and 46.84 million yuan, respectively, up 136.5% and 89.98% from the same period last year, achieving earnings per share of 0.09 yuan; gross margin was 24.6%, a sharp increase of 8.8 percentage points year on year, a sharp drop of -4.4 percentage points year on year, operating profit margin 5.23%, and losses increased significantly after the fixed increase and restructuring. The company's performance has exceeded expectations, and its profitability has increased dramatically. On a quarterly basis, revenue and profit for the second quarter were 440 million yuan and 26.19 million yuan, respectively, with a sharp increase of 26.8% month-on-month; the net profit margin for the second quarter was 6.33%, a sharp increase of 2 percentage points over the first quarter. The main reasons for the sharp increase in the company's performance are: 1) the improvement in demand brought about by the improvement in the photovoltaic market, while at the same time improving product profitability; 2) the new expansion of the online waste mortar recycling business to improve customer stickiness and profitability; 3) the gradual release of diamond cutting lines, with a capacity utilization rate of nearly 50% in the first half of the year, has already generated a profit of 3 million yuan, and profits will further increase dramatically as capacity utilization increases. The gross margins of the main products, silicon wafer cutting material/waste mortar and other products, were 21.6%, 26.9%, and 57.96%, respectively. Among them, the gross margin for recycling waste mortar cutting materials increased sharply by 15.43 percentage points. Company highlights: 1) Performance in the first half of the year increased sharply by 89.9% year on year, and the performance continued to enter the growth period; 2) After the merger of Xinda New Materials and Yicheng Co., Ltd., it fully exploited the “mixed ownership” characteristics, synergy effects and market pricing mechanism, and profitability rose steadily; 3) Prices of traditional SiC cutting materials and waste mortar recycling business gradually rebounded by nearly 10%, enhancing the company's profitability; 4) Polyester diamond cutting lines gradually reached production, and domestic and foreign poly/monocrystalline silicon wafer companies gradually accepted and achieved future profits of 3 million yuan. Open up a market of nearly 8 billion dollars Space; 5) Localization of cutting lines and powder from the three major raw materials in resin diamond cutting lines will drastically reduce costs, increase profitability by more than 10%, and lay the foundation for comprehensive replacement; 6) Active research and development of sapphire resin diamond cutting lines, laying a solid foundation for a potential market of nearly 1 billion dollars; 7) Implementing a “roof” with a unique 300MW distributed power plant to enter the distributed power generation field; 8) Actively expand the new material business. SiC pipes are a typical imported replacement product, which is expected to gradually be released in the 4th quarter; 9) Using Pingmei Shenma's major shareholder background, to create a “mixed Central Plains region” ownership ” A model listed company, forming a comprehensive platform for new materials; EPS is expected to be 0.3 yuan and 0.44 yuan in 14-15, and PE is 31 and 21 times. If you give 15 years and 30 times PE, the target price is 13.2 yuan. We continue to give “Highly Recommended” reviews.