The Investment Advisory Company released its 2016 annual report on the evening of March 20. It achieved total operating income of 316 million yuan for the year, an increase of 20.94% over the previous year; and realized net profit attributable to shareholders of listed companies of 38,891 million yuan, an increase of 16.40% over the previous year. The company's annual report performance is basically in line with the express report. The main reason for the steady increase in the company's performance in 2016 is that the company's traditional main air traffic control business is full of orders, and the signing of new contracts hit a ten-year high. The 2015 fund-raising project, the purchase of a D-class flight simulator and the construction of a simulation training center, progressed smoothly and contributed to increased performance. As a leader in the air traffic control industry, the company has benefited from the increase in flight complexity and the increase in the scale of investment in air traffic control systems. The air traffic control business orders are full, and continuous growth can be expected; the development of new VR products featuring panoramic interaction has been completed, and sales are expected to be achieved in 2017; and breakthroughs have been made in “AI+” strategic development, consolidating the leading position in air traffic control and urban transportation. The company's traditional main business has entered a boom cycle, new businesses are gradually being launched, and there is broad scope for future development. The company is expected to achieve operating income of 411 million yuan, 539 million yuan and 709 million yuan respectively in 2017-2019, net profit of 54 million yuan, 77 million yuan and 111 million yuan respectively, and EPS of 0.24 yuan, 0.34 yuan and 0.49 yuan respectively. Maintain a “Recommended” rating. Key investment performance is steady, moderate and positive, air traffic control orders have reached record highs, and fund-raising projects are progressing smoothly. The company's annual report performance is basically in line with the express report. The main reason for the steady increase in the company's performance in 2016 is that the company's traditional main air traffic control business is full of orders, and the signing of new contracts hit a ten-year high. The 2015 fund-raising project, the purchase of a D-class flight simulator and the construction of a simulation training center, progressed smoothly and contributed to increased performance. During the reporting period, the company's overall gross margin was 29.43%, down 5.40 percentage points from the previous year, mainly due to the decline in gross margin of the graphic image products and services business, informatization and other products and services due to changes in the business structure. The company's cost control effect is remarkable. While operating income increased by 20.94%, the amount of sales expenses and management expenses was basically the same as in 2015. The net cash flow from the company's operating activities decreased by 66.2338 million yuan over the same period last year, a decrease of 53.98%, mainly due to the combined impact of the current period of payment of import value-added tax for flight simulators of RMB 27.856 million and a decrease of RMB 20.3883 million in advance payments for newly signed contracts. 。 The prosperity of the air traffic control industry has increased, and continued growth in performance can be expected. According to Boeing's forecast, China's civil aviation transport fleet will increase from the current nearly 3,000 aircraft to 6330 aircraft by 2035, bringing the total to more than 9,300 aircraft, making it the world's largest aviation country. According to a report from Xinhua News Agency, during the “13th Five-Year Plan” period, the overall investment demand for China's air traffic control system is expected to reach 57 billion yuan, which greatly exceeds the “12th Five-Year Plan” investment. As one of the major suppliers of air traffic control products and services in China, the company has the highest market share among domestic manufacturers. Against the backdrop of increasing prosperity in the air traffic control industry, the total number of new contracts signed by the company in the air traffic control related field in 2016 exceeded 150 million yuan, an increase of more than 50% over 2015. Setting a new high in the past ten years, the company's performance is expected to continue to grow in the future. At the same time, after the military underwent reforms, bidding became more open and fair, and the amount of new military contracts signed by the company increased by 84% over the previous year. Furthermore, no final contracts have been signed between the successful bidders and users in each section of the “Next Generation ×× Control Center System” project that won the bid in December 2013, and the project has been transferred to the “13th Five-Year Plan” of military aviation. 。 The 2015 fixed increase project progressed smoothly and began to benefit. In November 2015, the company targeted an additional 450 million yuan, which was mainly invested in two projects: a D-class flight simulator purchase and simulation training center construction project, and a high-precision 3D full-face camera and 3D face recognition system industrialization project. Two major projects have now begun to generate revenue: the additional purchase of the D-class flight simulator was completed at the end of 2016. Currently, the company has invested in training services, and it is estimated that each can bring about 8 million yuan in gross profit per year; a breakthrough has been made in the development of a small 3D face camera prototype product. The company's experiments have proved that the accuracy rate of 3D/3D recognition has improved markedly and has strong anti-counterfeiting capabilities; the railway passenger pass inspection system has begun to be piloted at Chengdu East Railway Station, using face recognition for identification It has been verified more than 5 million times; 3D face collection and recognition products have been unveiled at many exhibitions, and face recognition technology has been applied to the safety and security of the Western Expo. 。 The development of a new VR product has been completed, and sales are expected to be achieved in 2017. During the reporting period, the company completed research and development of multi-person interactive detection technology, interactive experience programs, and VR science classroom products, forming three types of virtual reality experience products featuring panoramic interaction. The new product will be introduced to the market after passing certification in 2017. The company has a clear VR business layout focusing on education and science popularization, with advanced technology and continuous innovation. In 2016, the virtual reality experience center product achieved a profit of 602,300 yuan. In 2017, the company aims to complete the VR new product promotion and application demonstration project and achieve sales, which is expected to contribute a considerable increase in performance. Breakthroughs have been made in the development of the “AI+” strategy, consolidating the leading position in the fields of air traffic control and transportation. With the rapid iterative evolution from “Internet +” to “AI+,” artificial intelligence has begun to lead a new wave of technological revolution. The company has a deep accumulation of artificial intelligence technology and has taken the lead in applying new artificial intelligence technology to smart transportation and other products, including: the correct recognition rate of automatic vehicle identification products in actual applications has reached 99.60%; the automatic passenger pass inspection system at Chengdu East Railway Station has been tested by 5 million people, and the correct recognition rate has reached 95.6%. In addition, the company further laid out “AI+”: in December 2016, the company reached a cooperation with Sichuan University to jointly establish the “Sichuan University Intelligent Systems Research Institute” to gather the capital, technology and talent advantages of all parties to work together on the development of artificial intelligence technology; in response to the country's new demand for automatic warning capabilities for air traffic control systems, the company actively researched and developed, and is expected to launch the first batch of air traffic control command safety monitoring products based on automatic voice recognition in 2017. The company has outstanding advantages in the “AI+ industry” and is likely to continue to maintain its leading edge in the fields of air traffic control and urban transportation. 。 Risk warning: New business promotion such as VR and AI falls short of expectations; uncertainty in military business settlement.