Key points. 1. The traditional computerized flat machine business picked up, and the cessation of credit had remarkable results. In the first half of 2016, the company's computer horizontal machine business picked up, and the company's revenue increased to a certain extent compared to the same period last year. Since the company drastically reduced the sales scale of the buyer's credit model in the past two years and stopped this business model this year, the company drastically reduced the calculation of asset impairment losses, and operating profit increased significantly compared to the same period last year. During the reporting period, the company achieved operating income of 564 million yuan, an increase of 38.06% over the same period of the previous year; operating profit of 107 million yuan, up 338.65% over the same period of the previous year; and net profit attributable to shareholders of listed companies was 115 million yuan, up 35.87% from the same period last year. 2. Domestic and foreign market demand is picking up, and traditional horizontal machines are equipped with intelligent flexible customization platforms to achieve textile manufacturing industry 4.0. Domestic market: As a cyclical industry, the domestic horizontal machine renewal market has increased significantly as the service life of the equipment expires. Overseas markets: Bangladesh is the second only producer of sweaters after China. According to statistics, Bangladesh has 400,000 to 500,000 hand crank machines, and it is currently in the stage of replacing hand cranes with flat knitting machines, and demand in the flat knitting machine market is huge. Intelligent flexible customization platform: At the end of 2015, the company established Cixing Internet Technology Co., Ltd. to build an intelligent flexible customization platform for knitwear: 1) open professional designers to join to enrich product styles and design libraries to personalize consumers and enhance consumer stickiness; 2) integrate the production capacity resources of downstream foundries to achieve collaborative division of labor throughout the industry chain, and efficiently produce personalized products using industrialized processes. The company is building an intelligent textile manufacturing factory to connect with the Industry 4.0 era. 3. The robot business involves industrial+ services, fully benefiting from the big era of robot industrialization. Industrial robots: Through investment and layout, three companies, Cixing Robotics (Zhejiang), Suzhou Dingna (Jiangsu), and Dongguan Zhongtian (Guangdong), improved the regional layout of the company's industrial robot system integration. Cixing Robotics achieved revenue of around 90 million yuan in 2015, basically reaching the target of 100 million yuan in annual revenue set at the beginning of the year. Service robots: Through the Pistachio Robotics Company established in a joint venture with Ayou Culture and others, and invested in Beijing Shengkai Interaction, the company combines star IP and content products based on Abundance Interactive's artificial intelligence and machine vision technology, and uses the AU animation brand to spread and influence service robot products nationwide. Currently, two products have been launched: A U Magic Mirror (AR enhanced smart product for children) and A U Tuzhi (child service robot). It is currently being promoted through communication channels, children's channels, high-speed rail, or gift channels such as airports. 4. The multi-point layout of the Internet business has significantly increased profitability. The company invested 1 billion yuan to acquire 100% of Hangzhou Duoyile Network Technology Co., Ltd.'s shares and 100% of Hangzhou Youtou Technology Co., Ltd. Both companies have a very mature and stable core team. Half of Hangzhou Duoyile's employees are from Sky Network and have more than 5 years of experience in the mobile Internet industry. The core team members of Hangzhou Youtou have been working together for more than 5 years, and the average length of time in the Internet industry has been working for more than 7 years. Committed performance: 1) Hangzhou Duoyile: net profit of not less than 30 million yuan, 45 million yuan, and 67.5 million yuan in 2016, 2017, and 2018; 2) Hangzhou Youyu Investment: Net profit of not less than 40 million yuan, 60 million yuan, and 90 million yuan in 2016, 2017, and 2018, respectively. 5. Profit forecast: Without considering acquisitions, the company is expected to achieve net profit of 1.90, 2.38, and 294 million yuan respectively in 16-18, corresponding to EPS of 0.24, 0.30, 0.37 yuan, PE53X, 42X, and 34X, giving a “recommended” rating. 6. Risk Warning: New business development falls short of expectations.