Event: Revenue for the first quarter of 2014 rose 22.44% year over year, and net profit increased 38.6% year over year. In the first quarter of 2014, the company achieved total operating income of 170 million yuan, up 22.44% year on year; net profit attributable to owners of the parent company was 6.6664 million yuan, up 38.6% year on year; and earnings per share was 0.02 yuan. Comment: Microoil ignition revenue has increased dramatically, and there have been few achievements in business transformation. In the first quarter of 2014, the company's revenue grew steadily. Among them, the revenue of micro-oil ignition products was 7.68 million yuan, an increase of 299.16% over the previous year, mainly due to the small base of the business last year; the revenue of plasma products was 52.7 million yuan, a year-on-year decrease of 19.42%; the revenue of low-nitrogen combustion products was 71.95 million yuan, an increase of 1.51% over the previous year; in addition, the company actively promoted business transformation, with revenue from the first comprehensive boiler renovation project of 34.25 million yuan, starting the transformation of design and manufacturing to comprehensive energy saving and environmental protection services. The decline in the expense ratio is driving a rapid increase in net profit. In the first quarter of 2014, the growth rate of the company's net profit attributable to the parent company was significantly higher than revenue, due to a decrease of 6.46 percentage points over the same period, of which the sales rate fell by 10 percentage points year on year. Sales fees have been drastically reduced. In the first quarter of 2014, the company's fee rate for the period was 23.91%, down 6.46 percentage points from the previous year. The sales fee rate was 10.54%, a sharp drop of 10 percentage points. The main reason was that the 2013 Q1 company made improvements and improvements to problematic, defective products and projects, which led to high sales expenses. The financial rate was -1.27%, up 3.78 percentage points from the previous year, due to a decrease in interest income. The management fee rate was 14.65%, down 0.25 percentage points from the previous year. The business situation is good. In the first quarter of 2014, the company's prepaid accounts increased by 43.30% month-on-month, due to an increase in business volume and an increase in materials and installation fees paid. It is worth noting that at the end of this quarter, the company's inventory increased 91.86% year on year and 16.60% month on month; the operating cash inflow of the company in every quarter of 2013 Q2 - 2013 Q4 was better than the operating income situation; the cash inflow for the current quarter was far better than the operating income, and the company's actual operating conditions were relatively good. Future predictions: (1) By the end of 2012, the country had put into operation a flue gas denitrification unit with a capacity of about 230 million kilowatts, accounting for 28% of the capacity of thermal power units, with a denitrification capacity of nearly 90 million kilowatts put into operation in 2012. According to the operating conditions of the company and companies in the same industry, it is estimated that more than 160 million kilowatts of denitrification capacity will be put into operation in 2013, and 400 million kilowatt units will still need denitrification and transformation. Since special emission limits were implemented for thermal power plants in key regions on July 1, 2014, and electricity prices for thermal power denitrification were implemented in early 2013, we expect demand in the denitrification industry to remain hot in 2014. In 2015, the denitrification market in other fields such as cement and steel was launched. (2) In 2013, 32 million kilowatts of installed thermal power capacity were added, and it is estimated that about 30 million kilowatts of thermal power will be added in 2014. We expect demand for plasma ignition and micro-oil ignition equipment to drop slightly. (3) There were few waste heat utilization projects in the company in 2013, and we expect them to return to normal in 2014; at the same time, the company's new business “comprehensive boiler transformation” has begun to contribute revenue. Profit forecasts and investment advice. The company's net profit for 2014-2016 is expected to increase by 29.90%, 24.19%, and 23.67%, respectively, and earnings per share to reach 0.87 yuan, 1.09 yuan, and 1.34 yuan respectively. The closing price on April 23 corresponds to a dynamic price-earnings ratio of 24.22 times in 2014. Based on the company's growth, we believe that the company's reasonable valuation is 20-25 times the price-earnings ratio in 2014, and the corresponding stock price is 17.40-21.75 yuan, maintaining an investment rating of “increased holdings.” Major uncertainties. There is a risk that the denitrification and transformation process will not meet expectations, and gross margin will continue to decline.