Investment highlights reported a quarterly performance of 0.24 yuan, exceeding market expectations. In the first quarter of 2013, the company's main revenue increased 19.4% year-on-year, and gross margin increased by 5.7 percentage points to 27.1%, net profit increased sharply by 94.7% year on year, and EPS was 0.24 yuan, exceeding expectations due to the fact that Dandong Thermal Power's 2×300MW unit was put into operation in the fourth quarter of 2012. On a quarterly basis, operating income decreased by 1.9%, gross margin decreased slightly by 0.7 percentage points, and net profit increased by 242.7%. If the total impact of bad debt preparations, fixed asset impairment, and deferred income tax adjustments calculated in 12Q4 was deducted, EPS was reduced by about 0.11 yuan, net profit increased by about 31%. The fall in coal prices and the launch of new production opportunities contributed to a sharp increase in the company's profit. The company's thermal power units benefited from falling coal prices and a marked recovery in profit levels, and the overall gross margin increased by 5.7 percentage points to a high level of 27.1%. Specifically, we initially estimate that Sujiatun Thermal Power (100%), Shenhai Thermal Power (26%), Dandong Thermal Power (100%), Open-pit Mine (20%), Baiyinhua Power Plant (61%), and Fuxin coal gangue (51%) will contribute about 0.09, 0.07, 0.06, 0.04, 0.02 and 0.02 yuan in EPS, respectively. There are plenty of reserve projects, and continuous development can be expected. Looking at future development, the company's current reserve projects include Baiyinhua Phase II 2×660MW, Sujiatun Phase II 2×350, and Fuxin Wind Power 250MW with a total installed capacity of 2,270 MW, which is nearly 80% of the company's current installed capacity. The company is expected to continue to expand in future scale. Furthermore, the company will speed up the search for suitable coal project resources and actively carry out research and exploration of distributed energy such as gas and solar energy to prepare projects for the next step of development. By entrusting the management of Tieling Power Generation, additional power generation is expected to ease financial pressure. The company announced that it plans to sign an “Equity Entrustment Management Agreement” with the actual controller Huadian Group to manage 51% of its shares in Tieling Power (2×600+4×30 units). The management fee is 1 million yuan/year, and the net profit in 2012 is close to 100 million yuan. This transaction can avoid and resolve industry competition between the company and Huadian Group, which is conducive to the company's next management and long-term development. Furthermore, the company previously announced that it plans to issue no more than 150 million shares at a reserve price of 6.36 yuan/share. The company's balance ratio at the end of the first quarter was as high as 86.2%. Our preliminary estimate is that the company's balance ratio is expected to drop to about 81% after the additional issuance is completed, which will help ease the company's current heavy financial pressure. Risk warning. Electricity supply and demand in the Liaoning region affect the utilization hours of thermal power units; fluctuations in coal prices affect the company's profits; and the production of open pit mines in Haizhou and the net profit of tons of coal affect the company's profits. Maintain the “Overweight” rating. Given that the decline in coal prices exceeded previous expectations and that the private increase was completed at the end of 2013, we raised the company's diluted EPS from 2013 to 2015 to 0.56/0.66/0.69 yuan (undiluted EPS was 0.80/0.83/0.86 yuan, and the original 2013-2014 EPS was 0.45/0.48 yuan), and the corresponding P/E was 10.0/8.6/8.3 times (undiluted P/E was 7.1/6.9/6.6 times), giving the company 12 times P/E in 2013, with a target price of 6.8 yuan, maintaining” “Accumulation” rating.