The company released its 2016 interim report, achieving operating income of 564 million yuan, a year-on-year increase of 38.06%, net profit of 112 million yuan, an increase of 32.85% year-on-year, and a net profit increase of 58.44% year-on-year after deduction. The computer knitting machine business picked up, and profitability and various indicators rebounded markedly. In the first half of 2016, the company's computer knitting machine business picked up markedly. The computer knitting machine increased by 34.76% year on year, shoe machine increased 139.43% year on year, and the knitting machinery business sector achieved revenue of 513 million yuan, an increase of 42.46% over the previous year. Affected by the recovery in the main business, the company's deducted non-net profit rebounded sharply. At the same time, net operating cash flow increased 920.06% year on year, and EPS increased 27.27% year on year. In the past two years, the company has drastically reduced the sales scale of the buyer credit model and stopped this type of business model this year. The company has drastically reduced the asset impairment loss plan, and operating profit has increased significantly compared to the same period last year. The comprehensive layout of the intelligent equipment business: from industrial robots to service robots. The company has successively laid out robot system integration, machine vision, and core components in the field of intelligent equipment business, forming a comprehensive layout of intelligent business, and the company's intelligent business continues to break through and expand. In 2016, the company's business broke through again, entering the field of service robots using the intelligence+IP model, and released two service robot products aimed at the children's education market. By channeling pearls, it integrates upstream high-quality hardware, midstream artificial intelligence, and downstream sales channels with industrial resource integration. It has a positive impact on the company's future business development and related product sales and profitability. Investment suggestions: We estimate that the company's operating income for 2016-2018 will be 1,049 million, 1,302 billion, and 1,529 billion yuan respectively, corresponding EPS to be 0.20, 0.28, and 0.29 billion yuan, respectively. We continue to maintain our “buy” rating based on the recovery of the company's main business this year, the expansion of the robot business, and the favorable layout of intelligent businesses such as service robots, considering future contributions and asset impairment losses returning to normal. Risk warning: Demand for computer flat machine business is declining; intelligent equipment business falls short of expectations.