The company announced its 2014 annual report, achieving operating income of 702 million yuan, an increase of 6.26% over the previous year; realized net profit of 31 million yuan, a year-on-year decrease of 17.14%; and EPS of 0.16 yuan. 4Q Company achieved operating income of 253 million yuan, an increase of 19.77% over the previous year; realized net profit of 1,3661 million yuan, an increase of 7.83% over the previous year; and EPS of 0.1 yuan. The company did not pay dividends for 14 years. We believe that the growth rate of the company's performance is in line with expectations. The main reasons for the decline in net profit are: 1) The domestic economic growth rate has slowed, the alcohol industry continues to be sluggish, and downstream demand for the company's bottle cap products is weak. In 2014, the company sold 2.29 billion anti-counterfeiting bottle caps, an increase of 5.1% over the previous year; 2) The company's major winery customers reduced the purchase price of bottle caps through tenders and other methods, leading to a decline in the company's product gross margin: the company's comprehensive gross margin in 2014 was 20.57%, a year-on-year decrease of 0.83 percentage points, of which the gross margin of aluminum anti-counterfeiting caps was 30.46%, a year-on-year decrease of 3.66 percentage points, and the combined anti-counterfeiting cap margin was 16.33%, down 5.16 percentage points year on year; 3) The company increased its market development efforts to promote anti-counterfeiting bottle caps in other markets The application has led to an increase in management expenses and sales expenses. In addition, the continuous rise in labor costs has also caused the company's management expenses to increase: the company's 14-year sales expense ratio was 3.67%, an increase of 0.01 percentage points over the previous year; the management expense ratio was 8.12%, an increase of 0.98 percentage points over the previous year; and the financial expenses rate was 2.27%, down 0.46 percentage points from the previous year. The development of the dual main industries of anti-counterfeiting bottle caps+landscaping, and future Internet manufacturing and environmental protection are important directions. 1) The company is the absolute leader in the anti-counterfeiting bottle cap industry. Currently, it has an annual output of more than 2 billion caps, which is four times that of the second place, with a market share of more than 10%, and multiple barriers to customer quality, production capacity, capital and technology. Affected by the restructuring of the liquor industry in 2014, the growth rate of the company's bottle capping business has slowed. We judge that in the future, while continuing to adjust the bottle cap product structure, expand domestic and international market fields, and strengthen product quality, etc., the company will make further use of new thinking (such as the Internet and big data) to increase business model innovation, increase end consumer stickiness, increase the added value of bottle caps, and ensure the stable development of bottle cap business. 2) The company completed the acquisition of Huayu Garden in 2014 and achieved the development of the dual main business of anti-counterfeiting bottle caps and landscaping. Huayu Garden is a comprehensive landscaping enterprise with a full industry chain covering landscape planning and design, garden engineering construction, seedling planting and sales, and garden maintenance. In addition, the company's business scope also covers ecological restoration and municipal landscape greening projects, with obvious industry-leading integrated service advantages. The balanced development of municipal garden business and ecological restoration business has laid a good foundation for the company's long-term development and reduction of business risks. Additional issuance and supplementary flow guarantee business development, while also bringing room for imagination in extended mergers and acquisitions. The company recently announced that it plans to issue A shares privately to 5 specific investors. The issue price is 11.15 yuan/share, the number of shares issued is not more than 60.9 million shares, and the total capital raised is not more than 679 million yuan. After deducting issuance fees, all of it will be used to supplement working capital, mainly to promote Lipeng's landscaping business and supplement daily working capital. The lockdown period for this non-public offering is three years. We believe that the capital raised by this non-public offering can provide strong financial support for the development of the company's various businesses, improve the company's capital structure, reduce financing costs, and promote the rapid development of various businesses. Furthermore, we believe that the company has mergers and acquisitions and capital management genes, and that sufficient monetary capital after a fixed increase has also opened up room for imagination for the company to continue to extend mergers and acquisitions in the future. Profit forecasting and valuation. Based on the calculation of the additional 60.9 million shares issued this time, we predict that the company's diluted EPS in 2015-2017 will be 0.49/0.61/0.75 yuan respectively, giving the company 35xPE in 2016, corresponding to the target price of 21.35 yuan, a “buy” rating. For more information, please see our in-depth report “Lipeng Shares (002374) In-depth Report: 3.7 billion market cap leader+big data marketing+garden environmental protection 20150114” for the main uncertainties. Consumption of second- and third-tier liquor continues to decline; development progress for downstream beverage, medical, and other customers has fallen short of expectations.