Report summary: Overview of events The company released its 2016 annual report. In 2016, the company achieved operating income of 1,484 billion yuan, an increase of 6.47% over the previous year, and net profit of 145 million yuan, an increase of 12.76% over the previous year. The recovery of the company's main business has exceeded expectations, and industry concentration is expected to further increase. The company's prestressed steel industry achieved sales revenue of 1,348 billion yuan in 2016, an increase of 19.22% over the previous year. Since the second half of 2016, the company's prestressed steel products business has recovered strongly. The company achieved sales revenue of 458 million yuan and 493 million yuan respectively in the third and fourth quarters of 2016, with year-on-year increases of 27.11% and 84.28%, respectively, and net profit of 53.454 million yuan and 45.542 million yuan respectively, up 85.48% and 45.68% year-on-year respectively. The first and fourth quarters were originally a low season for sales of prestressed steel products. The company's sales revenue in the fourth quarter of 2016 hit the highest level since the ninth quarter. We believe that infrastructure investment and industry removal capacity since the second half of last year have boosted the company's performance by far exceeding market expectations. Currently, there are about 240 domestic manufacturers of prestressed steel products, but most of them have small production capacity, there is a big gap in production technology compared to companies, and the market pattern is scattered. As an industry leader, the company will continue to benefit from industry capacity removal in the future, and industry concentration is expected to increase further. The high-speed rail track board business is progressing steadily. Companies with a broad subway rail board market had rail board and labor revenue of 179 million yuan in 2016, a year-on-year decrease of 27.92%, mainly affected by project settlement methods and project cycles. The company is currently fully assisting the production of the Beijing-Shenyang High-Speed Rail Liaoning Section of the Jianping Project Board Plant, and will expand the East China and Southwest China Railway track board markets through joint ventures such as Shanghai Railway Wuhu Track Board Co., Ltd. and Chengdu Southwest Railway Track Co., Ltd. The company recently developed a two-way pre-stressed concrete composite damping track board for the subway. The first test section will soon be laid on Tianjin Metro Line 5, Line 6 and Urumqi Metro Line 1, marking the extension of the Yinlong rail board to the field of subway transportation. According to our estimates, it is conservatively estimated that from 2017 to 2025, China's high-speed rail board market space will exceed 21 billion yuan, and the subway rail board market space will also exceed 20 billion yuan. The company invested 100 million yuan to establish Hangang Steel Yinlong and joined hands with Hangang Steel Group to enter the rail market. Currently, the annual market for steel rails is 4 million tons, and the market space exceeds 30 billion yuan. Han Steel currently has 4 types of steel rails that have passed CRCC certification, with an annual heavy rail production capacity of 1.38 million tons. We continue to be optimistic about the company's layout in the rail board and rail markets. The company's rail transit business and prestressed steel products business are expected to go hand in hand. Profit forecast and investment advice: We expect the company's EPS from 2017 to 2019 to be 0.49 yuan (up 0.03 yuan), 0.59 yuan (up 0.04), and 0.71 yuan respectively. The corresponding PE is 29 times, 25 times, and 20 times, respectively, maintaining the “highly recommended” rating. Risk warning: infrastructure investment falls short of expectations, railway construction progress falls short of expectations, and raw material prices fluctuate sharply.