2016 performance exceeded expectations. Jiantao Laminate announced 2016 results: revenue of HK$15.53 billion, up 22% year on year; net profit of HK$4.35 billion, up 243% year on year, corresponding to earnings per share of HK$1.42 per share (after dilution). The net profit growth rate was higher than the company's profit forecast guidelines (+210~ 220%) and the CICC forecast (+202%). The company paid a final dividend of 18.5 HK cents per share and a final special dividend of 30.0 HK cents, with a corresponding dividend yield of 5.2%. Price increases contributed to a beautiful performance in gross margin and accelerated inventory turnover. 2H16's overall gross margin increased 8.7/6.3ppt to 25.3% year-on-year, reflecting a significant increase in profitability brought about by the price increase of copper clad plate and the company's vertical integration advantages. The number of inventory turnover days dropped sharply from 48 days in 2015 to 22 days, reflecting the shortage of supply in the copper clad plate market. Property sales bring rich cash flow, and one-time asset sales help increase net profit. Net cash of HK$1.75 billion in 2016 (vs. net liabilities of $2.06 billion in 2015) stemmed from previously confirmed revenue of $1.66 billion from pre-sale properties last year (accounting for 11%). Longhua Land's sales revenue reached HK$2.12 billion, so net profit after deduction16 increased 61% year-on-year to HK$1.95 billion. The development trend 1H17 copper-clad plate will continue to be in short supply. This wave of price increases is caused by a shortage of upstream raw materials. Prices of copper foil and glass fiber cloth are both rising, and H17 will continue. The release of supply is limited by the long expansion cycle. Copper foil will take 18 to 24 months, and glass fiber cloth will take 12 to 24 months. Only manufacturers starting to expand production at the end of 15 will be able to release new production capacity in 2H17. The company determined that there was a shortage of supply in the market for upstream materials, including fiberglass cloth, and the situation remained for at least one year. Vertical integration has a stronger competitive advantage. It is difficult for ordinary copper clad plate manufacturers to secure the procurement of copper foil or glass fiber cloth, and production may be curtailed due to lack of raw materials. Jiantao supplies its own raw materials, has vertical energy and advantages, and ensures an adequate supply of copper foil and glass fiber cloth, thus maintaining a high capacity utilization rate and ensuring delivery at all times, and has a stronger competitive advantage among downstream clients. The profit forecast maintains the profit forecast, after dilution in 7/18, EPS of HK$1.14/1.01 (previously 1.16/ 1.03), corresponding to a year-on-year growth rate of -20%/-11%, minus a year-on-year growth rate of 67%/-12% in non-net profit. Valuation and recommendations Currently, the company's stock price corresponds to 17/18 P/B 1.8/1.8x. Maintaining the recommendation, the target price was raised by 30% to HK$11.3, corresponding to 17P/B 2.2x, based on: 1) the original multiplier of 1.5x, that is, the average P/B (TTM) value from 09/6/09 to 6/10 when the company's profitability increased and P/B exceeded 1; 2) 0.7x increase, and the P/B (overall method) of H-share Hang Seng IT Equipment rose to 1.95x from 1.29x on 16/12/13. Risks The NEV policy falls short of expectations; price reversal of copper clad plate; risk of supply and demand for upstream raw materials; the privatization of the Singapore Copper Foil Company has not yet been processed.