1.35 billion yuan in cash acquired 15% of the graphene target shares to achieve mass production of single-layer graphene at low cost. In October 2016, the company announced the acquisition of 15% of the shares of Hengli Shengtai, the target company's target of graphene, with 1.35 billion yuan in cash. The target company promised net profit performance of 500 million yuan, 600 million yuan, and 700 million yuan for 2016-2018. The controller of the target company is Dr. Zhang Bozeng. The AMI company he founded (AngstronMaterials Inc.) holds hundreds of patents in the US, of which 25 have been authorized to the target company for domestic business. According to the company announcement, Hengli Shengtai has a low-cost mass production process for single-layer graphene, which is scarce in the world, and has many patents in the downstream application field of graphene, which is expected to achieve full coverage from graphene raw materials to applications. There are plenty of on-hand orders, and there is still considerable profit under careful estimation. We estimate under a cautious scenario: not considering subsequent new orders, we only consider that the 4 billion yuan order currently in hand is executed year by year according to production line investment and capacity release progress (the announcement at the end of 2016 is expected to have a production capacity of 200 tons, and assumes that the progress of the new production line is slower than the company's announcement); assuming that the single-layer rate of graphene products rises from 60% to 70% (the company's official website claims 90%); assuming that the net interest rate falls by 10% every year due to factors such as depreciation of investment and construction of production lines and increased financial expenses 69%) The target company is estimated to achieve net profit of 327,599,694 million yuan over the next three years, that is, if there is no major deviation between the target company's business model and information disclosure, there is still considerable profit under a cautious scenario, and it is close to the promised performance value. The majority shareholders have increased their holdings and invested 200 million yuan in the past year, at a cost price of 1,294 yuan/share, demonstrating strong confidence. From December 2015 to January 2016, the company's controlling shareholders (6 times) and the chairman of the board of supervisors (1 time) increased their holdings of the company's shares 7 times through asset management plans, increasing their holdings at an average price of 13.15 yuan/share, of which the chairman invested about 200 million yuan. On November 8, 2016, Mr. Li Renchao, the controlling shareholder of the company, transferred 15,150,310 shares of the company held by the asset management plan through the Shenzhen Stock Exchange's bulk trading system, accounting for 2.05% of the company's total shares; the average transaction price was 12.94 yuan/share, with a transaction amount of 196.045 million yuan. The company's shares held officially rose from 21% to 23.05%. We believe that the majority shareholders have increased their holdings by a large amount within the past 12 months, and recently used cash to acquire graphene targets, which shows their strong confidence in the company's future development. For the time being, carefully measure the performance contribution of the current graphene target and maintain the “buy” rating. For the time being, we carefully measure the performance contribution of the graphene target and fine-tune the profit forecast according to the company's acquisition progress. We expect the company to achieve net profit of 22,28,38 billion yuan in 16-18, corresponding to EPS of 0.29, 0.38 billion yuan, corresponding to EPS of 0.29, 0.38, 0.51 yuan, corresponding to dynamic PE 47,36,27 times, and maintaining the “buy” rating. Risk warning: The performance of graphene targets falls short of expectations, financial expenses are rising, progress in overseas general contracting falls short of expectations, competition in the domestic boiler market is intensifying, and large accounts receivable age poses the risk of asset impairment.