Investment Highlights released its 2016 annual report. In 2016, the company achieved operating income of 344 million yuan, a year-on-year increase of 2.47%, net profit attributable to shareholders of listed companies of 42.655 million yuan, a year-on-year decrease of 0.59%, and a basic earnings per share of 0.27 yuan. The market share of subway and tunnel-type fan products is steadily ranking first, and the increase in cost ratio is dragging down performance. In 2016, the company achieved subway sales revenue of 199 million yuan, accounting for 57.84% of total revenue; tunnel sales revenue of 59.2349 million yuan, accounting for 17.23% of total revenue. The company continues to maintain its leading edge in the domestic market in the subways and tunnels, ranking first in market share. The slight decrease in net profit achieved by the company in 2016 compared to the same period of the previous year was mainly due to an increase in sales expenses, management expenses, and financial expenses in various proportions, as well as an increase in sales tax and additional charges. Implement the national strategy of “civil-military integration” and promote epitaxial expansion, and the capital market helps companies enhance their overall competitiveness. In mid-October 2016, the company announced that it plans to acquire 100% of the shares of Hongxiang Technology and Zhongqiang Technology at 1.16 billion yuan and 1.05 billion yuan respectively, and plans to raise 1,016.6 billion yuan in supporting capital. The company's former top five shareholders subscribed for a total share of 90% of the supporting capital; of this, Zhou Jiancan, the company's controlling shareholder and actual controller, subscribed for 616.6 million yuan, accounting for 60%; fully demonstrating confidence in the company's long-term development. Up to now, the acquisition project has progressed smoothly. We expect that in 2017, the company will successfully complete the acquisition of Hongxiang Technology and Zhongqiang Technology. The three technological product advantages - ventilation technology, infrared thermal cameras, camouflage paint, and camouflage barriers - will help advance the national strategy of “civil-military integration”. Valuation and ratings: We estimate that the company's net profit from 2017 to 2019 will be 54 million yuan, 74 million yuan, and 92 million yuan respectively, and EPS will be 0.34 yuan, 0.46 yuan, and 0.57 yuan respectively. Considering that the company is one of the leading enterprises in the fields of subways, tunnels and nuclear power fans and ventilation systems in China, its performance is growing steadily year by year. In particular, in 2017, it is expected that the company will achieve a two-way breakthrough in industrial integration and performance growth, and maintain the “increase in ownership” rating. Risk warning: The M&A process fell short of expectations; the growth rate of subway construction fell short of expectations.