The 2016 annual results exceeded expectations, and Beiba Media announced 2016 annual results: operating income of 3.496 billion yuan, up 16.1% year on year; net profit attributable to parent company was 118 million yuan, down 19.4% year on year, corresponding to earnings of 0.29 yuan per share. The performance slightly exceeded expectations, mainly due to the better-than-expected driving school business and the reduction in investment losses of **** Company. The company will pay 1.20 yuan in dividends for every 10 shares, increasing 10 shares. The overall gross margin declined by 5.2 ppt to 20.5%, mainly due to the decline in both high gross margin driving school business revenue and gross margin. Financial expenses increased 105% year over year, mainly due to increased interest expenses due to the issuance of corporate bonds. Investment income increased by 34 million over the same period last year, mainly due to ****'s reduced losses and increased revenue from wealth management products. The number of projects under construction rose sharply to 213 million, mainly for the construction of charging stations for new energy vehicles. Trends The advertising business declined slightly, and the car service business grew steadily. Advertising revenue declined slightly by 5%, amortization costs were relatively reduced after the contract was renewed in 2017, and profits are expected to rise steadily. The addition of 4S stores in Shanxi and Guangxi contributed to a 30.3% increase in the overall revenue of 4S stores to 2.49 billion yuan, of which the maintenance business grew steadily by 10.0%. Furthermore, car leasing and scrapping businesses achieved high growth of 17.5% and 34.0%, respectively. The macroeconomy picked up in 2017, and the car service business is expected to maintain steady growth. The number of students enrolled in driving schools fell further by 31%, leading to a decline in both revenue and gross margin. We believe that the impact of the driving training industry policy and the relief of the foreign population in Beijing has been basically evident, and the driving school business is expected to bottom out and pick up in 2017. The construction of bus charging stations is progressing steadily, and 2017 will contribute to increased performance. In 2016, the company built a total of 20 charging stations, including 155 bus charging stations and 34 public charging stations. They will be put into use in 2017, and more than 400 bus charging stations will be built. The Beijing Public Transport Group will promote about 12,000 electric buses by 2020, and the monopolistic charging business will become the company's main source of profit starting in 2018. Profit forecast We maintain our earnings per share forecast of $0.40/0.52 for 2017/18 unchanged. Valuation and recommendations Currently, the company's stock price corresponds to 2017/18 37/27x P/E. The recovery in production and sales of new energy vehicles and the acceleration of investment in charging facilities will be catalysts for short-term stock prices. We maintained the recommended rating, but raised the target price by 9.46% to RMB 17.35, which is 22.53% higher than the current stock price. According to segmental valuations, the target market value is 70.0 billion yuan. The slowdown in the promotion of risky electric buses has led to low utilization of charging facilities; the number of driving school students continues to decline.