Key investment points The improvement in the main business structure is the driving force for performance growth, and we continue to be optimistic about the 17-year growth rate. The company achieved revenue of 1,599 billion yuan in 2016, +57.28% year-on-year, and realized net profit of 155 million yuan, +51.62% year-on-year. The company's revenue and profit growth rate was in line with expectations. In terms of quarterly conditions, the company achieved revenue of 454 million yuan in the 2016 quarter, +66.72% year-on-year, and realized net profit of 45 million yuan, or +410.83% year-on-year. We believe that the improvement in the main business structure is the main reason for the sharp increase in the company's performance in 2016. The large backlight business market space is 8 times that of small-size backlighting, and the company's share of large-size backlighting in customers such as Hisense and Skyworth continues to increase, which is expected to contribute to the main driving force for performance growth in the next 2-3 years, which is expected to reach 950 million yuan by 18 years. The company's internationalization strategy has achieved remarkable results. Overseas revenue in 2016 reached 203 million yuan, +789.88%. The main reason was the increase in overseas revenue of LiveCom Limited and the LED business. However, sales expenses and management expenses in line with the internationalization strategy also increased accordingly, +202.92%/33.72% year-on-year, respectively. The cost rate is expected to decline in line with the expansion of overseas scale. We are optimistic that the company's main business will continue to grow rapidly in 2017, and the growth rate is still expected to exceed 30%. The excessive competition situation in the industry has passed, and gross profit margins have steadily rebounded. The company's gross margin rebounded steadily to 24.21% in 2016, +0.65pct year on year. The company's large-scale backlights developed rapidly in '16, and the gross margin was lower for larger backlights, but even with significant revenue restructuring, the gross margin of the company's backlight LED business in '16 was 27.94%, +3.03pct. We believe that this aspect has benefited from excessive competition in the industry and the continuous increase in industry concentration. On the other hand, it stems from the company's layout in the high-end high-margin field and the initial results. Looking forward to the future, although revenue growth in low-margin lighting and communication technology services will reduce the company's gross profit margin to a certain extent, as the company accelerates the deployment of new higher-margin businesses such as optical films, optical devices, flashes, automotive LEDs, and infrared LEDs, the comprehensive gross margin is expected to stabilize or even increase further in the future. The long-term optimism about the company has not changed. The company is a domestic small-size LED backlight with a global market share of around 10%. As far as the LED backlight business is concerned, since 2012, the company has expanded from small-sized backlights to a large-size backlight field with 8 times the market space, breaking through major customers such as Hisense Skyworth and entering a period of explosion; at the same time, the company's LED lighting and small-pitch LED business have grown rapidly, and the company's mid-term growth space has opened up. The overall yield of backlight/lighting LED products reached 99.1%/98.9% respectively in 2016. As far as emerging businesses are concerned, the company is speeding up the deployment of high-margin businesses such as optical films, optical communications, and flashes. On the one hand, the company's optical film sales reached 2.12 million square meters in 2016, with a rapid growth trend of +530.36%, and is expected to achieve over 100 million revenue in 2017; on the other hand, it collaborated with ZTE to lay out optical devices and optical chip businesses in the Wuhu production base in May 2016, and plans to expand epitaxial development in the field of IC design and application. Currently, the company's 2.5G optical devices have been developed in small batches to domestic optical component manufacturers Offerings The 10G series is in the sample production stage. We are optimistic about the restructuring of the company's main business from small to medium to large sizes. At the same time, it is recommended to focus on the company's future layout progress in the field of optical chips and optical films. We are optimistic that the company's views have not changed in the long term. Risk warning. Competition in the backlighting business intensified; the expansion of new businesses such as optical communications and optical films fell short of expectations. Profit forecasting, valuation and investment ratings. We maintained a target price of 12.8 yuan and maintained a “buy” rating. Since the company announced a 10 free 8 conversion increase in the company's 2016 annual report, our EPS forecast for 17/18/19 was 0.16/0.2/0.25 yuan, respectively, after considering the effects of dilution, corresponding to 62 times PE in 18 years.