Investment points Safety view: Leading explosion-proof electrical appliance enterprise: The predecessor of the company was a collective ownership enterprise founded in June 1993 - Yueqing County Dianxian Explosion-proof Switch Factory. After more than 20 years of development, the company has grown into a leading enterprise in the field of explosion-proof safety in China. The company mainly engages in R&D, design, production and sales of explosion-proof electrical products. It has a complete product line of explosion-proof electrical appliances for mining, and occupies a leading position in the field of explosion-proof electrical appliances for mining. The company's downstream customers are mainly coal producers, including large coal companies such as Shenhua Group and Longmei Group. In recent years, the prosperity of the coal industry has declined, the company's downstream demand has slowed, and the explosion-proof electrical appliance business has been dragged down to a certain extent. The explosion-proof electrical appliance business is expected to hover at a low level in the next few years. The strategic transformation of the education industry, focusing on study abroad services: With the decline in prosperity in the coal industry, the company's explosion-proof electrical appliance business has been significantly affected. The company is actively planning a strategic transformation and building the company's second main business. After in-depth research, the company will transform into an education industry, focusing on study abroad services and online education. The company has successively acquired educational targets such as Zhongling Network, Yali Technology, Ledi Technology, Orchid Network, and Newban Culture, and has successfully entered segments such as international curriculum training, overseas services, and online education. The company's secondary sector is being formed. According to the performance promises of Yali Technology and Ledi Technology, 2016 was 16 million yuan and 10 million yuan respectively. If the promised performance can be achieved, the company's educational asset contribution is expected to account for nearly 30% of the performance in 2016. The popularity of studying abroad has not abated, and the 100 billion market is waiting to be explored: since the reform and opening up, the number of students studying abroad in China has continued to increase. In 2014, the number of students studying abroad in China reached 459,800, and the total number of people studying abroad in China since 1978 has reached 3,518,400. The scale of the study abroad industry in China has reached 250 billion yuan, mainly composed of several parts such as study abroad intermediaries, language training, study abroad tuition fees, and living expenses for studying abroad. Among them, foreign students account for 85% of overseas expenses, and the total tuition and living expenses of Chinese students can reach about 150-200 billion yuan; language training expenses, such as pre-exam training such as IELTS, TOEFL, and SAT, account for about 13%. According to the survey, the market size for study abroad examinations and training has reached about 30 billion yuan. Furthermore, most international students will also choose study abroad agencies to complete the procedures for studying abroad. The cost of study abroad intermediary services accounts for about 2%, and the estimated market size will reach 5 billion yuan. Transformational education is powerful, and high-quality projects have been implemented one after another: After the company determined the direction of transformation in the education industry, the company quickly searched for high-quality projects and successfully implemented educational projects such as Zhi Ling Network, Yali Technology, Ledi Technology, and Orchid Network, and the transformation education was impressive. At the same time, in order to find quality education targets in a better and more professional manner, the company also used the power of professional institutions to initiate the establishment of an education industry fund with a total scale of 500 million yuan, Fengyu Fund, through professional institutions such as Shanghai Qianhuang Investment Management Co., Ltd. and Shanghai Qinxuetang Investment Holdings Co., Ltd., and invested in Newban culture in a short period of time to enter special fields such as music training. Investment suggestions: In 2016-2017, the company's operating income is expected to be 770 million yuan and 848 million yuan respectively, up 45.82% and 10.13% year on year respectively; net profit is 94 million yuan and 120 million yuan, respectively, up 75.2% and 28.0% year on year; EPS is 0.64 yuan and 0.82 yuan respectively, corresponding to the closing price of PE on March 1, 2016, 52.01 times and 40.62 times, respectively. The company's main business has the ability to grow steadily, epitaxial expansion has led to a significant increase in the company's performance, and strategic transformation education enhances the company's valuation space. We are optimistic about the layout in the field of study abroad services and online education, covering it for the first time and giving it a “highly recommended” rating. Comparing Sino-Thai Bridge and Yinrun Investment, we believe that the company's reasonable valuation range in 2016 was 80-100 times PE, with a corresponding market value of 75-9.4 billion yuan, giving the company a target price of 48 yuan, and a corresponding market value of about 7.5 billion yuan after issuance. Risk warning: Competition in traditional main businesses is intensifying, extension expansion falls short of expectations, risk of merger and acquisition asset integration, risk of performance falling short of expectations, etc.