Incident description The Guangdong Electric Power Trading Center successively disclosed the 2017 annual bilateral electricity negotiations and the first month's bidding transaction. Among them, Guangdong Zhiguang Electric Power Sales Co., Ltd. won 468.2 million and 5.44 million kilowatt-hours of electricity respectively. Incident review The progress of electricity sales reform in Guangdong is significantly ahead of other provinces in the country. As the first local company to lay out the market after the electricity reform, Zhiguang Electric also got off to a good start in the electricity sales business. In July 2016, the company was approved to enter the Guangdong electricity sales market and won the bid for 1 million kilowatt-hours of electricity in that month. Throughout last year, the company participated in three monthly bidding transactions and independently won bids for a total of 59.2 million kilowatt-hours of electricity. In the 2017 annual electricity bilateral negotiation transaction and first month bidding transaction disclosed this time, the company competed for a total of 473.64 million kilowatt-hours of electricity, which is about 8 times the total volume of transactions last year, and is expected to exceed 500 million kilowatt-hours throughout the year. Along with the steady progress of power reform, the electricity service market for terminal industrial and commercial enterprises is the key direction of Zhiguang Electric's current transformation. Currently, the company is still making great efforts to expand its user coverage, and has completed distribution in nearly 10 cities. Among them, Sun companies such as Guangzhou, Zhaoqing, Dongguan, Shantou, Jiangmen, and Dongguan have obtained business qualifications, and subsidiaries in Nanning and Kunming are applying. The company's electricity service revenue in last year's three-quarter report reached 75 million, contributing about 5 million in profit, a significant increase over the previous semi-annual report. It is expected that the electricity service business in the fourth quarter will contribute the main profit increase to the company. In the electricity service business, the company can carry out various value-added services for users, such as installation, operation and maintenance, electricity sales, power distribution, and energy saving. Currently, in addition to the breakthrough in the electricity sales business in the Guangdong region, the company's distribution network business has also begun to expand. In October last year, the National Development and Reform Commission and the Energy Administration officially issued the “Administrative Measures on the Orderly Release of Distribution Grid Business”, which allows social capital to invest in, build, and operate incremental distribution networks. Meanwhile, the company's holding subsidiary and Guangxi Rongkai Huayuan Electroplating Industrial Park Investment Co., Ltd., natural persons Luo Zhiguang, and Xu Aifen signed the “Investment Cooperation Agreement for Electricity Facilities in the Electroplating Industrial Park of Liuzhou Automobile City” to jointly invest 50 million yuan to establish Guangxi Zhiguang Rongkai Electric Power Co., Ltd., which will mainly be engaged in the construction and operation of the park distribution network in the future. Targeted additional distribution has been completed, and the company's transformation has received strong support. The company raised a total of 1.49 billion yuan in net capital from 19.50 yuan/share in the early stages, of which 1.06 billion yuan will be invested in equipment investment in the construction of an offline electricity service network and the development of an online intelligent electricity cloud platform. The availability of capital this time will effectively support its business transformation. It is estimated that the company's EPS for 16-17 will be 0.43/0.61 yuan, respectively, maintaining the recommendation. Risk warning: 1. The pace of power reform within the South Grid region has slowed down; 2. The cable bidding volume of power grid companies has declined sharply.