Earnings forecast and valuation. In order to exercise the stock options, the Company needs to log2014/15E net profit growth of 25% and 28% respectively. Although the Company’s 1H14 results trailed its full year targets, we are upbeat on its prospects given the expected delivery of the remaining stone paperorders (remaining value of Rmb49.45mn) to Diqiuweishi Advanced Eco-Materials, cooperation with Davis-Standard in the overseas market, successful consolidation of Shantou Far East and the gradual increase in production capacity. We forecast Jinming Machinery’s 2014-16E EPS of Rmb0.58/0.72/0.86, and apply 30x 2015E PE to the Company, translating to a target price of Rmb21.6 per share. Initiate with a BUY rating.