Event: On April 29, 2016, Liaoning Chengda released its 2016 quarterly report. According to the quarterly report, in 2016, the company's operating income was 1.7 billion yuan, up 12% year on year, and net profit attributable to shareholders of listed companies was 290 million yuan, down 37% year on year (all report data comes from company announcements). Liaoning Chengda achieved epitaxial development through fixed increases. On April 13, 2016, the company announced a non-public stock offering plan. It plans to issue no more than 320 million shares to state-owned companies, Giant Investment, Jinhui Asset Management, and China-Europe Logistics, and raise no more than 5.38 billion yuan to acquire 19.595% of the shares of China Holdings. Prior to this acquisition, the company's financial services sector was mainly equity investment in Guangfa Securities and industrial fund management. After the acquisition is completed, the company's financial services sector will increase equity investment in the insurance business, which will facilitate the integration of the company's financial resources and promote the integration of industry and finance. Demand in the insurance industry is gradually increasing. The rising level of urbanization has brought about a demand for insurance. The share of China's urban population has risen from 36% in 2000 to 55% in 2014. In the future, residents' consumption attitudes and habits will gradually change as the level of urbanization continues to advance, and people will pay more attention to their own health conditions and life security, so the demand for insurance products will further increase. At the same time, the rapid aging of the population has brought immediate need for insurance. The life expectancy of China's population has increased from 69 years in 1990 to 75 years in 2014. In the future, the number of retirees who need to be supported by individual laborers will continue to increase, bringing immediate demand for insured life insurance and annuity products. China Insurance has taken advantage of its state-owned background to maintain rapid development. (1) The net profit of China Insurance has maintained a high growth rate. China Holdings is a comprehensive insurance finance group integrating industrial insurance, life insurance, and asset management. In 2014, China Holdings achieved net profit of 1.8 billion yuan, an increase of 78% over the previous year. In the first half of 2015, the company's net profit was 2.2 billion yuan, which has already exceeded 20% for the whole year of 2014, and net profit has maintained a high growth rate. Furthermore, in 2014, the property insurance premium income of China Financial Insurance, a holding subsidiary of China Holdings, was 34.9 billion yuan, with a market share of 4.6%, ranking fifth in the country. (2) China Insurance has the advantage of a state-owned background. Dongfang Asset, the top two shareholders of China Holdings, and China Insurance Insurance Fund, have a state-owned background, strong capital strength and platform advantages, which have played a positive role in extending the product line of China Holdings, and at the same time can provide rich resources for the development of China Holdings. Guangfa Securities accounts for a relatively large profit contribution. The company's shareholding in GF Securities is 16.4%, making it the third largest shareholder of GF Securities. In the first quarter of 2016, GF Securities achieved a net profit of 1.3 billion yuan, contributing more than 200 million yuan of profit to Chengda in Liaoning, accounting for more than 60% of the profit contribution. Most businesses in Chengdu are developing in parallel in Liaoning. In terms of oil shale business, due to the sharp drop in international oil prices, the growth rate of the company's oil shale business is slowing down. We believe that oil prices have now reached a low point, and the oil shale business may have rebounded somewhat in 2016; in terms of commercial distribution business, sales revenue of 2.8 billion yuan, a year-on-year increase of 6% over the previous year, textile export sales revenue of 900 million yuan and total profit of 22.81 million yuan is expected to develop steadily in 2016; in terms of biopharmaceuticals, it is expected that in 2015, Chengda Biotech's sales revenue of 900 million yuan and total profit of 500 million yuan is an important source of profit for the company. The profit of the company's biopharmaceuticals business in 2016 will be basically the same as in 2015. Investment advice: Buy-A investment rating, the target price for 6 months is 22.7 yuan; 2016-2018 EPS is 0.54 yuan, 0.66 yuan, and 0.72 yuan respectively. Considering the company's oil shale business, commercial distribution business, biological business, and financial business and fixed growth, we expect the company's target market value to be about 34.7 billion yuan. Due to the macroeconomic downturn and the sharp drop in international crude oil prices, the company's operating income and net profit declined in 2015. It is expected that the growth of the company's financial business, the recovery of the oil shale business, and the steady development of the commercial distribution business and biopharmaceutical business in 2016 will bring about a recovery in the company's performance. We expect the revenue growth rates in 2016-2018 to be 2%, 3%, and 3% respectively. Considering the net profit contributed by China Insurance, the company's net profit and revenue growth rates in 2016-2018 were 95%, 22%, and 9%, respectively. Risk Warning: Market Risk, Risk of Macroeconomic Downturn Exceeding Expectations