Incident: On the evening of October 14, Jiayu Co., Ltd. announced the third quarter results forecast, according to which net profit attributable to shareholders of listed companies for the first three quarters is expected to change -6.4% to 8.0% compared to the same period in 2013, and net profit for the same period in 2013 was 41.6543 million yuan. Comment: Overall performance is slightly lackluster, and the market is expected to continue to improve in the future. Judging from the announcement, the company's revenue growth rate in the first three quarters was about 29%. This is mainly due to the company's six major regional layout covering domestic and foreign regions, and the market size continues to expand. However, the company's net profit growth rate is lower than the revenue growth rate mainly because the company has increased its external expansion and related expenses have increased rapidly. At the same time, due to the decline in real estate sentiment and the continued rise in labor costs, the company's gross margin has not improved significantly. We believe that the company's future market performance is expected to improve. On the one hand, the company currently has sufficient orders and achieved orders of 3,521 billion yuan in the first three quarters, an increase of about 70% over the previous year, providing a guarantee for the fourth quarter and next year's results; on the other hand, the company is continuously developing new products and trying to enter the retail sector, which will have a positive impact on the company's profitability and cash flow situation. The fixed increase is expected to guarantee the company's subsequent development. According to the non-public stock offering plan issued by the company on September 22, the company plans to raise no more than 860 million yuan in total capital, after deducting issuance fees, all of which will be used to supplement working capital. We believe that through this non-public offering of shares, the company's balance and liability structure will be significantly optimized, and the company's resilience to risk and operational safety will be improved, which also provides a guarantee for the company to further expand its business. Furthermore, the actual controller, Tian Jiayu, had a subscription ratio of 23.36%, and the lockdown period for all subscribers was three years, demonstrating investors' confidence in the company's future development. Laying out the smart home sector, the prospects are promising. With the rise of the Internet of Things, the smart home industry has received more attention, and people are placing higher demands on their own living environment. Based on this, the company is also continuously increasing the development and promotion of smart doors and windows. Products include doors and windows with air purification functions that filter PM2.5, intelligent control doors and windows, safety security windows, automatic gas leak alarm doors and windows, etc. Furthermore, the company also stated that it is actively seeking integration and breakthroughs in the company's existing business with smart environmental protection, retail and other fields through mergers and acquisitions and strategic cooperation. We believe that smart homes are a trend in the development of the construction industry, and doors and windows are an important part of it, and the company's future development in the smart home field is worth looking forward to. The prospects for the energy-saving door and window industry are good. The investment and construction development of urban public buildings, commercial land and residential buildings in China is still accelerating. In particular, the rapid advancement of new urbanization provides an effective guarantee for the rapid development of the construction market, thus providing a source of demand for the door, window and building curtain wall industries. At the same time, smart, green, and low carbon will become the direction of new urbanization development, including the integrated development of Beijing-Tianjin-Hebei Province, and the requirements for green development will become more clear. Among them, Beijing will implement new energy efficiency standards for doors and windows starting in 2015, which will help further increase the concentration of the door and window market in the region. As a leading enterprise in the domestic energy-saving doors and windows industry, the company has more than 100 patents. Its products meet current technical standards for energy-saving buildings and green buildings, and the market prospects are broad. Profit forecast and rating: We maintain the company's earnings forecast of $0.30, $0.41 and $0.55 per share for 2014-2016. Considering the company's leading position in the door and window industry and its future growth, we maintain an “increase” rating. Risk factors: risk of approval of this private stock offering; risk of changes in real estate regulation policies; risk of overseas business operation; risk of fluctuating raw material prices; risk caused by rapid expansion of the company.