Main points of investment:

In 2013, EPS was 0.05yuan, an increase of 105% over the same period last year, and the performance exceeded expectations. The company's annual operating income was 2.2 billion yuan, an increase of 3.2% over the same period last year. The net profit attributed to shareholders of the listed company was 17 million yuan, an increase of 105% over the same period last year, equivalent to 0.05 yuan in EPS, and the performance exceeded expectations. Of this total, the revenue in the fourth quarter was 630 million yuan, an increase of 6.4 percent over the same period last year, and the net profit was 3.09 million yuan, from negative to positive, an increase of 6.49 million yuan over the same period last year. The company's 2014Q1 realized revenue of 530 million yuan, an increase of 5.9% over the same period last year. The net profit attributed to shareholders of the listed company was 4.81 million yuan, an increase of 25% over the same period last year. The non-net profit was 4.76 million yuan, an increase of 97% over the same period last year. The performance was in line with expectations.

The gross profit margin of 201 4Q1 declined slightly, the expense rate was relatively stable and the asset structure was relatively healthy. Although it was affected by the slow global economic recovery in 2013, the company actively opened up new customers, the total sales increased, and the overall business situation was relatively stable. Gross profit margin in 2013 fell half a percentage point year-on-year to 7.7 per cent, while 2014Q1 gross margin was unchanged at 6.6 per cent year-on-year. During this period, the expense rate is relatively stable, with sales expense rate and management expense rate fluctuating around 1.5% and 2.5%, respectively. In 2013, net profit margin rose 0.4 percentage points to 0.8% as the company spun off its former loss-making subsidiary, Sichuan Huafang Yinhua, and reduced provisions for bad debts and inventory decline. 2014Q1's asset structure continued to improve, with inventories down 6 per cent from the beginning of the year to 466 million yuan. Operating cash flow is basically the same as the same period last year, more benign.

In 2014, the company will comprehensively promote the strategy of "strengthening fabrics, breaking through home textiles and magnifying fabric". In 2014, the company expects to produce 248 million meters of printed and dyed cloth, 9.6 million pieces of home textile products and 1.92 million pieces of clothing. In terms of printing and dyeing, exports account for about 70%. The company has a variety of leading technologies and has strong international competitiveness. In terms of home textile, it will continue to promote the free brand "Blue Platinum", which has been launched by Tmall, and stores have also been opened in Shanghai, Changzhou, Xiamen, Jinan, Qingdao, Binzhou and other places. in the future, the company will build a home textile terminal sales network based on the integration of online and offline. In addition, the company's subsidiary "Binzhou Colour Network Technology Co., Ltd." has a certain competitive strength in the field of e-commerce, which lays the foundation for the company to promote O20.

2014Q1 has completed a private placement, raising a total of 400 million yuan (major shareholders contributed 90 million yuan to the land and actually raised 310 million yuan). The funds raised this time will help the company greatly increase its production capacity. We expect the company to have full orders, the cotton direct subsidy policy to narrow the price gap between domestic and foreign cotton and the devaluation of RMB, and the company will achieve high growth on a low base. We maintain the annual EPS of 0.10 to 0.26 on 14-15-16. The forecast of 33 yuan, corresponding to the PE in 47-17-14, considering the current market value of 1.4 billion, the company's restorative growth rate is relatively fast, maintaining the overweight rating.