Conclusions and suggestions: After the company's assets were restructured, Pingmei became the largest shareholder, and at the same time gave generous performance promises and support. At the same time as resource integration began, the recovery of the photovoltaic industry began. The company predicts that Q3 profits will improve markedly month-on-month. In the future, with the increase in demand for cutting materials and the launch of new businesses such as King Kong wires and power plants, the company's profitability will improve well. It is estimated that the company's EPS in 2013 and 2014 will be 0.127 yuan and 0.231 yuan respectively, and YoY will reverse losses and grow by 81.23%, respectively. The current P/E for years 13 and 14 is 56 times and 31 times. Given expectations of a recovery in the photovoltaic industry and strong support from major shareholders, the target price was 9 yuan (40x in 2014) when it was upgraded to a purchase investment proposal. Since May, Yicheng New Materials has achieved profit and loss balance in Q2: Xinda Xincai achieved revenue of 499 million yuan, YoY +11.65%, and net loss of 7.17 million yuan in the first half of the year. Among them, Q2 began with Yicheng New Materials, a subsidiary of Pingmei Shenma Group, with quarterly revenue and net profit of 316 million yuan and 1.03 million yuan respectively. In the first half of the year, the company's comprehensive gross profit margin was 15.81%, YoY down 4.2 percentage points. Among them, the gross margin for the Q2 quarter was 18.3%, and QoQ increased by 6.8 percentage points. Forecast Q3's net profit for the single quarter reached 0.15 to 017 million yuan, better than expected: The company predicted that after merging with Yicheng, the company's cutting material production capacity reached 100,000 tons, and the domestic market share was about 40%, greatly enhancing pricing power (the company is interested in actively increasing product prices) and network advantages. The net profit of the 1-3Q company is expected to reach about 8 million to 10 million yuan, and YoY +165% to 231%. Strong support from the majority shareholders shows confidence: According to the promises made during the asset restructuring, Pingmei Shenma Group, the majority shareholder of the company, gave strong support to Xinda. In addition to pledging 60 million yuan and 100 million yuan for Yicheng New Materials, which is the target of the restructuring, in the 13/14 year performance (the difference will be covered by cash; Yicheng made a profit of about 4 million yuan in the first half of 2013), it also promised that if the company's stock price did not perform well in the secondary market, it would increase its holdings (detailed below). The resin diamond wire and power plant business will become a new focus: the company has built a 1.2 million kilometer resin diamond cutting line and exported it to Japan. The second phase of 2.4 million kilometers per year will begin construction in the second half of '13, and is expected to be put into production in '14. Compared with traditional mortar cutting, resin diamond wire can increase cutting efficiency by more than 100%, and the production capacity of 3.6 million km/year corresponds to the cutting demand of 1.8 GW silicon wafers. At the same time, Yicheng New Energy, a subsidiary of Yicheng New Materials, will complete and operate a 12.5 MW golden solar power plant project this year. In the future, Yicheng New Energy is applying for 180 MW, and the 400MW power plant construction agreement signed by Xinda New Energy and Chaoyang County in Liaoning Province before 2015 is expected to contribute considerable revenue starting in 2014. The photovoltaic industry has begun to recover: with the peaceful resolution of the Sino-European photovoltaic reversal incident and the rapid expansion of markets in China, Japan, and the US, the global photovoltaic industry has begun to show signs of recovery. It is estimated that this year's global installed capacity will reach 35GW, YoY +10%, while China is expected to contribute more than 8 GW of installed capacity, which will effectively boost the business conditions of local battery and module manufacturers. At the same time, policies of subsidies and improved financial support will greatly benefit the operating rate of domestic midstream manufacturers and downstream power plant builders. Profit expectations: The company's revenue for 2013 and 14 is expected to reach 1,535 billion yuan and 2.186 billion yuan respectively; YoY increased by 76.91% and 42.36% respectively; realized net profit was 64 million yuan and 116 million yuan respectively; YoY achieved loss reversal and growth of 81.23% respectively; and EPS of 0.127 yuan and 0.231 yuan respectively. The current P/E for 2013 and 14 is 56 times and 31 times. In light of expectations of a recovery in the photovoltaic industry and strong support from major shareholders, the target price was 9 yuan (40x in 2014) when it was upgraded to a purchase investment proposal.