Investment highlights: In 2016, the company achieved operating income of 2.25 billion yuan, a year-on-year increase of 11.92%, net profit of 99.58 million yuan, a year-on-year increase of 70.45%, a year-on-year increase of 70.45%, net profit of 73.38 million yuan, a year-on-year increase of 73.38%, and a year-on-year gross profit margin of 19.72%, an increase of 0.6 pct over the previous year. 4Q16 achieved revenue of 560 million yuan, a year-on-year increase of 13.54%, net profit of 33.38 million yuan, a year-on-year increase of 8350%, and an overall gross profit margin of 19.50% in 4Q16, an increase of 1.02 pct over the previous year. A cash dividend of 1.5 yuan is distributed for every 10 shares, with a dividend rate of 79%. The dividend rate is 1.7% based on the latest closing price. The company integrated the supply chain and achieved foreign trade exports of US$218 million, an increase of 5.8% over the previous year in the face of a decline in China's silk exports. In terms of manufacturing, the company procures raw materials on a shared platform and established Guangxi Jiaxin Silk Co., Ltd. to carry out the “warehousing and logistics base project”. The company is closer to the raw material base to grasp the trend of raw material prices and reduce costs. Through mechanized transformation, employment was reduced, and overall manufacturing efficiency increased by nearly 20%. During the reporting period, expenses were well controlled, and the sales/management expenses ratio was 6.55%/6.85% respectively, down 0.33/1.06 pct from the previous year, respectively, and the overall net interest rate increased. The company plans to raise no more than 396 million yuan, of which 150 million yuan will be used for the construction of warehousing and logistics bases. Specific projects include: 1) 10,000 square meters of standard wire storage; 2) 25,000 square meters of standard cocoon storage; 3) 20,000 square meters of silk processing and trading market; 4) 5,000 square meters of auxiliary office buildings and loading and unloading workshops; and 5) the establishment of an 18,000 square meter distributed transit warehouse in Jiaxing. The logistics base in Yizhou, Guangxi is close to the origin of raw materials in the industry, so the company can more intuitively understand changes in the raw materials market and price fluctuations, so as to make value judgments on collateral products. Profit forecasts and investment advice. The company's main business has strong brand advantages and industrial chain integration advantages. We are optimistic that the company will achieve cost control and efficiency improvement through intelligent upgrading on the basis of the steady development of its main business. At the same time, it is optimistic that the Golden Silkworm Network will use the establishment of a warehousing base in Guangxi to carry out a series of value-added services for industrial integration and performance growth. The company is expected to achieve net profit attributable to the parent company of 105, 1.14, and 124 million yuan in 2017-2019, a year-on-year increase of 5.03%, 8.57% and 9.42%. Referring to relevant comparable companies, the price-earnings ratio in 2017 was between 27X-146X, giving the company 48XPE in 2017, corresponding to the target price of 9.58 yuan/share, and an increase in holdings rating. Risk warning: Prices of raw materials have fluctuated greatly, and the export environment is sluggish.