Comment: 1. Methyl ethyl ketone and isooctane project feeding test run methethyl ketone and isooctane device feeding. The main installations and scale of the first phase of the “1.38 million tons/year propane and mixed carbon four utilization project” under construction by Ningbo Haiyue New Materials Co., Ltd., a holding subsidiary of Haiyue Co., Ltd., are: propane dehydrogenation unit (600,000 tons/year), gas fraction isooctane unit (600,000 tons/year), and methylethanone unit (40,000 tons/year). According to the company announcement, all the commissioning work of the gas, isooctane, and methethyl ketone units of the first phase of the project has been completed; fire, safety, and environmental protection have been registered, inspected and approved by the relevant departments; the methethyl ketone unit was put into test operation on May 15, and the gas, isooctane, and SAR (sulfuric acid regeneration) devices were put into test operation on June 6. Normally, chemical projects need to go through a commissioning period of 3 to 6 months after being put into trial operation. We expect the company's methylethone and isooctane devices to be produced within the year. The fall in raw material prices has led to an increase in product price spreads. The methyl ethyl ketone and isooctane project tested by the company this time uses liquefied gas as a raw material, and isooctane is the main component of alkylated oil. We analyzed the price difference between methethyl ethyl ketone, alkylated oil, and raw liquefied gas. Since May, domestic liquefied gas prices have declined markedly. The average price in the first week of June reached 6017 yuan/ton, down 8.5% from May prices. In the face of falling raw material prices, the price differences of methethyl ketone-liquefied gas and alkylated oil-liquefied gas reached 4196 and 1,784 yuan/ton respectively in June, up 24.2% and 27.1% respectively from May. Since summer is usually a low season for liquefied gas demand, the price of liquefied gas is expected to remain low, and the price difference between methoethyl ketone, alkylated oil and raw materials is expected to remain high in the next few months. Furthermore, the purity of isooctane of Haiyue Co., Ltd. is higher than that of ordinary alkylated oil, which has a better effect on increasing the octane value of gasoline. We believe that the price and profitability of its products will also be higher than that of ordinary alkylated oil. The product price difference of Haiyue Co., Ltd.'s methyl ethyl ketone and isooctane projects remained at a high level in the early stages of production, and the company's products had good profitability during the test run stage. Although the rise in liquefied gas prices towards the end of the year may lead to a decline in product price spreads, the company's project is expected to reach production at that time, the increase in operating rate will reduce unit production costs, and the profitability of the project will still be relatively good. We believe that the test run and production of the above two projects will lead to an increase in the company's performance. The PDH project is expected to be completed in the near future. According to the company's 2013 annual report and 2014 first quarter report, by the end of 2013, the overall progress of the company's propane dehydrogenation unit had reached 79.76%. In the first quarter of 2014, the company's propane dehydrogenation unit mainly carried out process pipeline installation, pressure testing, and other unit purging, testing, electrical instrument rectification and finishing construction. We expect the company's PDH installation to be completed in the near future. 2. Profit forecast and investment rating As the company's methylethone, isooctane, and PDH projects are completed and put into operation, the company will transform from a trading enterprise to a production enterprise. As the operating rate of the project gradually increases, the company's revenue and profit will grow steadily, and it is expected to become a petrochemical enterprise with revenue reaching 10 billion dollars in the future. We expect the company's EPS from 2014 to 2015 to be 0.83 and 1.51 yuan respectively. According to the 2014 EPS and 20 times PE, we gave the company a six-month target price of 16.6 yuan to maintain the “increased holdings” investment rating. 3. Risk indicates the risk that the progress of projects under construction will not meet expectations; the risk of large fluctuations in product and raw material prices; the risk of enterprise transformation; and the progress of domestic refined oil quality upgrading.