Incidents: On April 28, 2014, Mindong Electric Power released a quarterly report. In the first quarter, the company achieved main business revenue of 18.1 billion yuan, a year-on-year decrease of 18.13%; net profit attributable to shareholders of listed companies of 4.5071 million yuan, a year-on-year decrease of 35.84%; basic earnings per share of 0.0121 yuan, which fell short of expectations. Comment: The decline in trade volume has led to a recovery in gross margin. The first quarter was a low season for precipitation in Fujian Province. The low amount of precipitation had a big impact on the hydropower business. Coupled with the impact of real estate sales and settlement, the first quarter results fell short of expectations. Although the gross margin for a single quarter rebounded 27.11 percentage points to 50.52% month on month, this was mainly due to the impact of the decline in trade business volume and had nothing to do with the improvement in main business operations. During the reporting period, asset impairment losses increased sharply year over year due to increased preparations to accrue bad debts; affected by the downturn in the shipbuilding industry, the company's investment income changed from positive to negative. It is difficult to make significant progress in mining projects, and diversification is progressing slowly. The company has been in the mining industry since 2012, but due to the slow recovery of the global economy and China's economic transformation, global mineral prices have continued to fall, especially the molybdenum ore market, which continues to be sluggish. Fu'an Xindi Molybdenum Co., Ltd., which holds 20% of the company's shares, and Ningde Huansan Mining Company both lost money in 2013. We judge that the mining market will continue to be sluggish in 2014, making it difficult for the company's mining sector to contribute profits. The company said it will continue to advance the overall development strategy of “mainly electricity, related diversification”, but the company's main business is still concentrated on electricity and real estate, and investment in other fields is progressing slowly. Profit forecast and rating: The company expects EPS of $0.22, $0.24, and $0.26 in 14-16 to maintain the “increased holdings” rating. Risk factors: A sharp drop in precipitation, a decrease in hydropower generation; real estate sales fall short of expectations; and the pace of mining integration is lower than expected.