We recently visited the company and expect that there is a high probability of performance improvement in all our businesses in 2017. As the leader of domestic printing and packaging machinery, long-term benefit from consumer upgrading, we are optimistic about the future development of the company. The specific points are as follows:

1. Downstream printing is not a sunset industry, benefiting from the upgrading of domestic consumption

Despite the rapid development of electronic products, the printing of newspapers and books accounts for about 10% and 70% to 80% of the printing and packaging, and the downstream customers of the company are mainly the latter, not the sunset industry. With the upgrading of domestic consumption, both international brands and Taobao stores are paying more and more attention to product packaging, and the current business situation of the company's customers also confirms this view. As one of the few listed companies in the printing and packaging equipment industry, the company has obvious advantages in platform and scale, and is the invisible beneficiary leader of domestic consumption upgrading.

2. The first intelligent production line of printing equipment is expected to be put into production in 2017.

After three or four years of research and development, production and trial operation, the company has made full preparations in the intelligent production line of packaging and printing. The first intelligent production line in cooperation with Guilian Holdings is expected to be put into production in 2017, which will have an exemplary effect on the entire printing and packaging industry. Comparing the similarities and differences in the development of the printing and packaging industry at home and abroad, as well as the rhythm of the development of various domestic industries, we believe that the transformation of the intelligent production line launched by the company meets the current industrial needs of the domestic printing industry, and the company's equipment business will have a better growth in 2017.

3. Cloud printing has found a better model, and the cigarette label business is stable.

After Changrong Jianhao moved to the new factory in April 2015, a better business model has been formed after exploration and adjustment, and the M end is the key. Revenue in the first three quarters of 2016 was 43.89 million yuan, an increase of 41.31 percent over the same period last year. The company will then expand into the Beijing market and is expected to make a profit in 2017. In terms of cigarette printing, Shenzhen Liqun printing business is stable, mainly affected by equipment gross profit margin has declined this year, is expected to return to the normal level in 2017.

4. Set up an industrial fund to integrate the printing industry

The company contributed 594 million yuan (99%) and Dehou invested to set up "Evergreen Printing Industry M & An Equity Investment Partnership". The investment field will focus on the enterprises related to the upstream and downstream industries of the company, mainly the start-up and growth enterprises with the conditions for industrial mergers and acquisitions. The company's advantages in equipment will be further reflected in industrial integration.

5. Expected performance improvement in 2017, covering for the first time, with a "buy" rating

The company's revenue in the first three quarters of 2016 was 790 million, up 1.23%, while net profit was 88 million, down 24%. We expect that the EPS in 2016 will be about 0.4 yuan, and the performance in 2017 will be greatly improved. Cover for the first time, giving a "buy" rating.