Incident: On the evening of April 24, Jiayu Co., Ltd. released its results report for the first quarter of 2014. During the reporting period, net profit attributable to owners of the parent company was 5.615,900 yuan, up 82.69% from the same period in 2013; operating income was 270 million yuan, up 49.24% from the same period in 2013; basic earnings per share was 0.03 yuan, up 200.00% from the same period in 2013. Comment: First-quarter results increased dramatically, and on-hand orders were plentiful. During the reporting period, the company's net profit increased sharply by 82.69%. On the one hand, the company's business scale expanded and revenue grew rapidly; on the other hand, current government subsidies contributed 2.5913 million yuan, a significant increase of 87.40% over the same period in 2013, accounting for 46.14% of net profit in the first quarter. In addition, the company signed 2,706 million yuan of new contracts in 2013, an increase of 46% over the previous year, while the number of new contracts signed in the first quarter of this year was 715 million yuan, an increase of 74.23% over the previous year. The carry-over time for company contracts is usually within 1-3 years, which also guarantees continued growth in subsequent performance. Gross profit margin is still declining, and is expected to rise steadily in the future. The company's gross sales margin in the first quarter was 17.51%, down 1.82 percentage points from 2013, mainly due to intense competition for engineering projects and varying increases in labor costs, manufacturing and installation labor costs. We believe that as the company's strategic cooperation with Evergrande and other major customers becomes more extensive and deeper, the gross margin of the door and window business will stabilize. At the same time, with the development of the company's new products and the gradual increase in sales share, it will play a positive role in increasing gross margin. Looking at the cost rate for the period, it decreased by 0.93 percentage points to 16.70% compared to the same period in 2013. Among them, the financial expense ratio increased by 1.22 percentage points and 2.49%, mainly due to the increase in interest accrued on corporate bank loans during the reporting period, and the interest payable on the issuance of corporate bonds at the same time; while the management expenses rate and sales expense ratio all declined by varying degrees. The development of the door and window industry welcomes new opportunities. The investment and construction development of urban public buildings, commercial land and residential buildings in China is still accelerating. In particular, the rapid advancement of new urbanization provides an effective guarantee for the rapid development of the construction market, thus providing a source of demand for the door, window and building curtain wall industries. At the same time, smart, green, and low carbon will become the direction of new urbanization development, including the integrated development of Beijing-Tianjin-Hebei Province, and the requirements for green development will become more clear. Among them, Beijing will implement new energy efficiency standards for doors and windows starting in 2015, which will help further increase the concentration of the door and window market in the region. The big customer strategy is progressing steadily. The door and window industry is a typical “big industry, small company” pattern. The concentration of the downstream real estate industry is much higher and has been steadily increasing (the top 100 account for 30%). Therefore, under the model of allied real estate companies, the market share of door and window companies is expected to increase markedly. In addition to Evergrande, the company is also actively negotiating with other real estate companies and discussing possible strategic cooperation methods. Earnings Forecast and Rating: We maintain the company's 14-16 earnings forecast of $0.44, 0.62 and $0.83 per share. According to EPS of 0.44 yuan in 14 years, 25 times PE was given, and the target price was 11 yuan, maintaining the “gain” rating. Risk factors: risk of changes in real estate regulation policies; risk of overseas business operation; risk of fluctuating raw material prices; risk caused by rapid expansion of the company.