Event: The company released its 16-year annual report, with operating income of 594 million yuan, an increase of 46.45% over the previous year, and net profit attributable to shareholders of listed companies of 56.93 million yuan, an increase of 28.08% over the previous year. Earnings forecast for the first quarter of '17, loss: 4 million yuan to 8 million yuan, loss for the same period last year: 1,3032 million yuan. Comment: Performance growth is in line with expectations. In 2016, the company's performance continued to grow rapidly, with a year-on-year increase of 28.08% in net profit. In 2016, the company increased R&D efforts, and R&D expenses reached 81.4968 million yuan, an increase of 59.24% over the same period last year. High R&D expenses affected the company's net profit performance to a certain extent, but laid a solid foundation for the company's future development. The net cash flow from the company's operating activities in the current period was 114.7071 million yuan, an increase of 226.69% over the previous year. The main reason is the increase in transaction settlements received in advance by the company's Internet+smart logistics cloud service platform. It is expected that the company's Internet+smart logistics cloud platform business will continue to grow rapidly in '17. The main reason for the company's projected losses in the first quarter of '17 is the obvious seasonal fluctuations in the company's business. There were few operating income and sales paybacks in the first quarter. The main reason for the increase in losses was the increase in business-related costs and expenses, and the company had 5,5775 million yuan of restricted stocks to be amortized in the first quarter. Policy support, the information technology industry is developing rapidly. With policy support, domestic software and information technology services have developed rapidly in recent years. The Ministry of Industry and Information Technology's “Software and Information Technology Service Industry Development Plan (2016-2020)” suggests that by 2020, the business revenue of the software and information technology service industry will exceed 8 trillion yuan, with an average annual increase of more than 13%. It accounts for more than 30% of the information industry. Among them, revenue from information technology services accounts for 55% of business revenue, and revenue from information security products has reached 200 billion yuan, with an average annual increase of more than 20%. The rapid development of the industry provides strong support for the continued growth of the company's performance. China's leading industry software and big data solution service provider. Its main business is industry application software research and development, IT solutions and information technology services. Industry software development and big data business: The company has been deeply involved in the development of industry application software and big data business for many years, with deep technology accumulation. The main markets cover key industries with high demand for confidence, such as telecommunications, electricity, finance, transportation, and government. Customers include top enterprises in the industry such as China Datang Group, China Telecom Group, and Nomura Research Institute. Internet+smart logistics cloud service platform business: Relying on its deep industry experience and technology accumulation in software development in telecommunications, transportation and other industries, the company follows the wave of cloud computing, develops an Internet+smart logistics cloud platform, builds a complete logistics ecosystem for cargo owners, logistics companies, car owners, etc., and launches a logistics sharing platform for Huihui intermodal transport to actively enter the logistics market. In 2017, the company's Internet+smart logistics cloud service platform business revenue was 10.31 million yuan, accounting for 1.74% of total revenue, and the growth trend was good. Profit forecast and valuation analysis: We are optimistic about the company's strong endogenous strength and technical advantages in the field of industry software and big data. With capital help, the company is expected to usher in further development. The company's net profit for 17-18 is expected to be 64 million yuan and 75.5 million yuan, corresponding to 129 times and 109 times PE, corresponding to EPS 0.67 and 0.79, giving it an “increased holding” rating. Risk warning: Customer concentration is high, software competition in electricity, telecommunications and other industries has intensified, and the promotion of the Internet+smart logistics cloud platform falls short of expectations. Note: Guoyuan Securities's direct investment department has participated in HKUST Guochuang. Currently, the direct investment department holds 4426297 shares in HKUST Guochuang, accounting for 4.61% of the total share capital.