Incidents: The company released its semi-annual report. In the first half of 2016, the company achieved operating income of 148 million yuan, a year-on-year decrease of 37.6%; net profit of 15.31 million yuan, a year-on-year decrease of 72.1%. Employee stock ownership plans are being purchased, demonstrating confidence in the company's development. The first phase of the company's employee stock ownership plan is 150 million yuan, with a leverage of 1:1, and is purchasing shares of Kyle New Materials through the secondary market. As of August 1, it was announced that a total of shares had been purchased, accounting for 1.38% of the total share capital, with a transaction amount of 77.27 million yuan and an average transaction price of 19.35 yuan. Despite the decline in the interim report performance, it is predicted that there will be a significant improvement in the second half of the year. There are two main reasons for the decline in reported performance: 1. Performance impact caused by the order revenue recognition mechanism (factors such as delivery, project progress, etc.); 2. The decline in sales of industrial protective enamel materials due to the fact that the peak of energy efficiency in desulfurization and desulfurization has passed. In the future, with the increase in demand for platform enamel materials brought about by the mass construction of urban subways, and the replacement of enamel facades for construction with glass facades, the company's long-term development is optimistic. The report predicts that the company's performance will improve significantly in the second half of the year (according to the survey report). Enamel boards are becoming more and more popular in urban rail construction. During the “13th Five-Year Plan” period, the country's new subway mileage is expected to be 3,000 to 4,000 kilometers. Stations will be set up every 1.8 kilometers on average (not excluding repeated stations), and about 2,000 new subway stations will be added. The future market space will be 4 to 6 billion yuan. As sales prices drop (production costs are also falling), enameled steel sheets are being accepted by subway lines all over the country, and enameled steel sheets are already being used in the new subway in Beijing. The report predicts that the company's order revenue from subways and tunnels in 2016 will be around 300 million yuan. With environmental protection as the strategic fulcrum, it is imperative that green enamel facades replace glass facades. According to the new regulations, pure glass curtain walls cannot be used in buildings with 3 floors or more, such as schools, hospitals, and government offices, etc., and enameled steel sheets are widely accepted because of their advantages such as safety and corrosion resistance. Furthermore, the company's new product enamel curtain wall (such as self-cleaning and self-illuminating) is gradually being accepted by the market and will become a major flashpoint for the company in the future. Investment suggestions: The forecast for 2016-2018 EPS is 0.44 yuan, 0.65 yuan, and 0.84 yuan, respectively, and the corresponding PE is 52 times, 35 times, and 28 times, respectively, and “increase holdings” is recommended. Risk warning: New façade products and subway enameled steel plates are falling short of expectations.