Changrong Co., Ltd. announced that it plans to privately issue no more than 80 million shares, no more than 5 additional distribution targets, and raise no more than 2 billion yuan in total capital, which will be used for the construction of a demonstration base for the new intelligent green equipment manufacturing industry and the construction of a new intelligent green printing equipment R&D and innovation base. Comment:1. The company proposed the latest development strategy and refinancing requirements. Intelligence, digitalization, and greening are the development trends of the printing industry. The company proposed a new development strategy “taking printing equipment as the lead, extending the upstream and downstream industrial chain to achieve collaborative development of equipment manufacturing and the printing industry”. The details include: (1) Building the world's leading printing equipment service supplier with intelligence and building an intelligent manufacturing and processing base for high-end equipment and parts in China with printing equipment as the main body. (2) Build a new model of Internet+ printing in China with cloud printing as the core, and develop high-end business and consumer printing for mass culture. (3) Connect with the Internet of Things technology, give full play to the role of the capital market, integrate high-quality resources, and enable the company to achieve new leaps and bounds in unconventional development. In order to focus on improving the comprehensive manufacturing capabilities of smart factories, the company proposed a refinancing plan. 2. Review of business performance for the first half of the year and new development strategy Changrong Co., Ltd.'s total operating income for the first half of the year was 473 million yuan, up 26.17% year on year, net profit was 86.56 million yuan, up 30.58% year on year, and operating cash flow was 121 million yuan, up 123.4% year on year. Due to factors such as the slowdown in overall demand in the industry, the company's equipment delivery situation was basically the same as the same period last year, with net profit of 42 million yuan, the same as the previous year. From January to June 2015, Shenzhen Liqun Printing achieved revenue of 197 million yuan, an increase of 81.05% over the same period last year, net profit of 65 million yuan, and a significant improvement in cash flow. In the face of slowing traditional business growth, the company has implemented a strategic layout for smart factories: cooperating with Therudi to enter the India-China sector, acquire Heidelberg's post-press business to strengthen its product technology capabilities, participate in Guilian Holdings (completed delivery in July), and signed a three-year intelligent factory purchase order of 180 million yuan. The subsidiary Tianjin Rongcai has accumulated many years of experience in intelligent chemical plant software development and has already had successful projects. The daily business volume of Tianjin Changrong Jianhaoyun Printing Technology Co., Ltd., a holding subsidiary cooperating with Taiwan Jianhao, has increased markedly, and the second half of the year will usher in a peak season. After moving into a new factory area in 2014, the cloud printing business began official external operations in April 2015. The daily transaction volume has exceeded 400,000, 500 dealers and 10,000 members have been developed, and online promotion officially began in August. In the first half of the year, sales revenue was 21.17 million yuan, of which sales revenue was 2.09 million yuan in the first quarter and 19.08 million yuan in the second quarter. The target for the whole year was 100 million yuan. Cloud Printing still lost 9 million dollars in the first half of the year, and is expected to be profitable next year. The company has also purchased rapid printing equipment for clothing printing from Sweden and plans to promote it online in the second half of the year. The factory and equipment for cloud printing have basically been put in place, and production capacity has been reserved. 3. Annual results and order conditions In the interim report, the company predicted annual sales revenue of 1.25 billion yuan and expected net profit of 235 million yuan, which is slightly lower than our previous forecast. As of June 30, 2015, the contract amount for equipment that has been ordered and has not yet been delivered is 252.04 million yuan (including 179.67 million in China and 72.37 million abroad). Orders in the first half of the year increased by 28%, mainly because of this year's tenders by tobacco companies, equipment updates (orders did not include Liqun), and orders were mainly delivered in the second half of the year. Since printing equipment is affected by the current macroeconomic situation, it is expected that there will be little growth throughout the year. The growth points are mainly due to the contribution of Li Qun and Guilian's stable printing performance. 4. Long-term fund-raising projects are beneficial to the company's competitiveness. Beginning in 2013, the company has increased investment in research and development of overall solutions for smart factories. Up to now, it has successfully developed intelligent automated logistics systems, production process data collection systems, electronic positioning systems, and automatic paper stack conversion systems that can replace manual labor, and has invested more than 70 million yuan. The company plans to raise capital needed for long-term development through this non-public offering, increase investment in intelligent printing equipment technology research and development and high-end products, focus on building a new “Internet+printing intelligent manufacturing” business model, implement intelligent product upgrades, strengthen the company's ability to provide services in the entire printing and packaging industry chain, consolidate the company's leading position in the printing and packaging equipment manufacturing industry, and achieve the company's strategic transformation from a domestic post-press equipment manufacturer to an intelligent factory solution provider and leading Internet printing service provider in the printing industry, comprehensively enhancing the company's core competitiveness and sustainable development capacity. The construction period for the fund-raising project is about 2 years, and the project can achieve revenue of 2 billion dollars. The next two years will be an investment period for Changrong. If the increase in distribution is affected by the capital market, the company will start construction with its own capital. 5. Short-term refinancing puts pressure on stock prices Although in the long run, refinancing helps the company complete a new strategy and open up the ability to form a complete set of solutions for smart factories from post-press to printing and digital inkjet printers, if 80 million more shares are issued in the short to medium term, the share capital will increase 23%, diluting performance. At the same time, due to the recent weakness in the A-share market, the short-term increase in issuance will put pressure on stock prices. However, according to the current refinancing process, it is expected that the additional issuance will only be implemented next year. The company will adjust the pace according to market conditions, and if the additional issuance cannot be implemented, it will use its own capital for construction. 6. Investment advice: Prudent recommendation - A does not consider additional distribution. Next year, it will benefit from cloud printing volume and profit, Guilian's equity investment income contribution, steady growth of strength, and steady growth in printing equipment. We expect EPS of 0.65, 0.78, and 0.94 yuan in 2015-2017, and dynamic PE 40 times next year. Considering the sharp decline in the market during the company's suspension, the short to medium term refinancing put pressure on stock prices, and the adjustment of short-term investment ratings to prudent recommendations, I am still optimistic about the company's growth model of Internet+intelligent printing+mergers and acquisitions, and competitiveness in the long term.