Incident: On the evening of September 21, Jiayu Co., Ltd. announced plans for the non-public offering of shares. According to the plan, the company plans to privately issue 169,960,471 shares to 5 specific targets, including Beijing Shunxin Real Estate Co., Ltd., Nanjing Risen Investment Management Partnership (limited partnership), Anqing Wanjiang Hi-Tech Investment and Development Co., Ltd., Wang Zhaoyi, and actual controller Tian Jiayu. The total amount of capital to be raised will not exceed 860 million yuan, all of which will be used to supplement working capital after deducting issuance fees. All of the issuers subscribed to the shares in this non-public offering in cash, and the subscribed shares cannot be transferred within 36 months from the date the issuance ends. Comment: The financial strength is expected to be greatly improved, providing a guarantee for the company's development. The building exterior industry where Jiayu Co., Ltd. is located is a typical capital-intensive industry. By the end of the first half of this year, the company's balance ratio was 57.30%, while bank loans reached 595 million yuan. In the same period, the company's net fixed assets accounted for only 12.33% of total assets. Under the asset-light nature of the industry, the rising balance ratio will limit the company's ability to finance future debts. We believe that through this non-public offering of shares, the company's balance and liability structure will be significantly optimized, and the company's resilience to risk and operational safety will be improved, which also provides a guarantee for the company to further expand its business. Furthermore, the actual controller, Tian Jiayu, had a subscription ratio of 23.36%, and the lockdown period for all subscribers was three years, demonstrating investors' confidence in the company's future development. The prospects for the energy-saving door and window industry are good. 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. As a leading enterprise in the domestic energy-saving doors and windows industry, the company has more than 100 patents. Its products meet current technical standards for energy-saving buildings and green buildings, and the market prospects are broad. Products are being upgraded at an accelerated pace, and the smart home field is worth looking forward to. As people's awareness of consumption increases, they also place higher demands on their own living environment. In recent years, products such as doors and windows with air purification functions that filter PM2.5, intelligent control doors and windows, and photothermal windows have been popular in the market. Currently, the company also said it is actively seeking integration and breakthroughs in the company's existing business with smart environmental protection, retail and other fields through mergers and acquisitions and strategic cooperation. We believe that smart homes are a trend in the development of the construction industry, and doors and windows are an important part of it, and the company's future development in the smart home field is worth looking forward to. Profit forecast and rating: We maintain the company's earnings forecast of $0.30, $0.41 and $0.55 per share for 2014-2016. Considering the company's leading position in the door and window industry and its future growth, we maintain an “increase” rating. Risk factors: risk of approval of this private stock offering; 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.