Main points of investment:

In 2013, the annual report EPS was 0.24 yuan, and the net profit increased by 149% over the same period last year, which was in line with expectations. The company's sales revenue was 896 million yuan, an increase of 11% over the same period last year. The net profit attributed to shareholders of the listed company was 98.62 million yuan, an increase of 149% over the same period last year. The EPS was 0.24 yuan, and the EPS after deduction was 0.17 yuan, which was in line with the forecast of the performance KuaiBao. In the fourth quarter, operating income of 190 million yuan increased by 10% over the same period last year, while net profit of 50.9 million yuan increased by 558% over the same period last year, mainly due to more subsidies from Hubei Jiayu government in the fourth quarter. In 2013, the profit distribution plan is to distribute 0.8 yuan in cash for every 10 shares, send 2 bonus shares, and increase 8 shares for every 10 shares to all shareholders with the capital accumulation fund.

The pick-up in exports led to performance growth, while the rise in gross profit margin and government subsidy incentives led to a sharp rise in net interest rates. The company's export income accounts for 94%, and it is highly dependent on exports. Since the second half of 2013, the global demand for outdoor sports accessories has obviously picked up, and the functional fabrics developed by the company for this market segment are rapidly showing a trend of booming production and sales and increasing gross profit. Among them, fabric revenue increased by 4.84% over the same period last year, and clothing revenue increased by 5.17% over the same period last year. In 2013, the company received a number of government subsidies and incentives, totaling 36.92 million yuan, contributing 40% of the net profit, and it is expected that there will still be subsidies in the follow-up to the Hubei Jiayu project.

In November 2013, the company announced that it planned to buy 25.87% of the shares of the software for no more than 28.457 million yuan. The overall valuation of the underlying company is 110 million yuan, and the agreement stipulates that if the net profit after tax reaches 41 million yuan in 2014, it will continue to increase the proportion of investment. The core staff of the company all have the background of working in a first-class game company, and their team has rich experience and strength, which will bring profits to the company in the future.

The company will increase investment in its own brand KR and export brand SN, and is expected to promote the KR outdoor brand through new carriers such as mobile games in 14 years. The company has been adhering to the leading technology of high-end fabric and clothing suppliers, with its strong fabric production advantages, the company also began to gradually increase investment in the downstream industry. In 2013, the KR brand is no longer simply pursuing extension expansion to bring growth, but focusing on increasing the per unit yield of each store. KR currently has 50 direct stores, with sales exceeding 30 million yuan, an increase of 50% over the same period last year. The company is also trying to cooperate with new channels such as the Internet to promote free brands. In terms of export brand SN, the company focuses on marketing and channel development, many times in the international well-known outdoor sports exhibitions, and strive to win popularity. At present, SN has 350 stores in the European market and has entered all 90 stores of REBEL, the largest local sporting goods chain in Australia. Although the start-up of the Japanese and Korean market in 2013Q3 has just begun, it has achieved better results than expected.

The high-end outdoor industry is in a period of rapid growth, the quality of the software of the acquisition target company is excellent, and the mobile game industry is growing rapidly, maintaining an increase in holdings. It is estimated that the EPS for 14-15 years will be 0.30ax 0.36 yuan, corresponding to 31.6 PE 26.3 times. Considering the reversal of the company's main business and the prospect of entering the high-growth mobile game industry, it will continue to increase its holdings.