Incident 1. On the evening of April 25, the company released its first-quarter performance report, and the performance exceeded expectations. The company achieved operating income of 364 million yuan in the first quarter, an increase of 9.53% over the same period last year; realized net profit attributable to owners of the parent company was 22 million yuan, a sharp increase of 200.05% over the previous year. 2. At the same time, the company announced that the initial public offering application of the company's shareholding company Yunnan Innovation New Materials Co., Ltd. was approved by the Issuance Review Committee of the Main Board of the China Securities Regulatory Commission. The company holds 3.4 million shares of Yunnan Innovative Materials Co., Ltd., accounting for 3.39% of the total share capital before issuance. The growth rate of the short review industry is slowing down, and the leading main business continues to recover. (1) The growth rate of the industry has further slowed. As the country's tobacco control efforts increase, the growth rate of production and sales in China's tobacco industry has clearly slowed down. In 2015, China's tobacco products industry achieved main business revenue of 935 billion yuan, a year-on-year increase of 5.50%, and a profit of 122 billion yuan, a year-on-year decrease of 1.40%; in January-February 2016, the growth rate of the industry declined further sharply, with main business revenue falling 13.10% year on year to 189.7 billion, and total profit falling 17.00% to 27.8 billion yuan. (2) Production capacity, customers, and categories drive a steady increase in the company's revenue against the market. In terms of production capacity, the company started the second phase of construction of the Hubei Company in 2015 to prepare production capacity for developing markets in Hunan, Hubei, Sichuan and Chongqing. By category and customer, in terms of tobacco labels, the company is currently a qualified supplier to international tobacco giants such as the British and American Tobacco Market (Singapore) and Japan Tobacco International; in terms of social packaging, the company has also achieved remarkable results in expanding packaging applications for high-end cosmetics, pharmaceuticals, alcohol, gifts, etc., with continuous accumulation of customer resources, and continuous expansion of product application fields. (3) The low base effect is obvious. In the first quarter of 2015, the company's operating performance was violated by Wang Bin, Wang Zhaode, and Wang Guoyou, partners and actual managers of Zhejiang Demei Color Printing Co., Ltd., a holding subsidiary of the company, which led to a sharp rise in the bad debt calculation of Zhejiang Demei, and Wang Guoyou. As a result, the net profit base for the same period last year was low (0.7 billion yuan). Various businesses developed normally during the reporting period. In addition to the 2.25 pct increase in management expenses over the period, the sales expenses ratio and financial expense ratio decreased by 0.15 pct and 0.46 pct, respectively, while gross margin increased sharply by 4.64 pct to 30.36% year over year. The recovery in performance led to a sharp increase of 200.05% in net profit over the same period last year. Furthermore, the company's asset impairment losses in the first quarter decreased by 232.47% year on year, mainly due to reverting to bad debt provisions calculated at the end of the previous year; investment income increased by 47.74% year over year, mainly due to an increase in investment income confirmed according to equity law accounting. Actively carry out strategic cooperation and lay out new businesses to seek growth.