Investment highlights: Events: Recently, the company released its 2016 annual report: the company's 2016 revenue was about 2.5 billion yuan, up 19.9% year on year; net profit was about 250 million yuan, up 73.0% year on year; and EPS was about 0.38 yuan. The company's revenue for the fourth quarter was about 550 million yuan, up 21.1% year on year, and net profit was about 82.38 million yuan, compared to -1.16 million yuan for the same period in 2015. The company plans to distribute 0.8 yuan (tax included) for every 10 shares, while using the capital reserve fund to increase 3 shares for every 10 shares. Comment: Benefiting from the high prosperity of the region, cement volume and price have risen sharply throughout the year. On the demand side, fixed asset investment in Tibet increased 23% year on year to about 159.6 billion yuan in 2016, of which fixed asset investment in highway construction increased nearly 100% year on year to about 40 billion yuan, driving regional cement demand (production) to increase 35% year on year. The company increased its equipment operating rate, and its annual cement sales volume (holding+shareholding) was about 4 million tons, an increase of more than 30% over the previous year. On the supply side, there was no new production capacity in the region in 2016, and the supply of cement production capacity was insufficient. Some cement was purchased from Golmud, Qinghai. In terms of price and profit, when regional cement supply was in short supply, the average cement price in Tibet rose sharply for 2 rounds in 2016. The net profit per ton of the four cement production lines involved by the company was about 138 yuan, an increase of 49 yuan over the previous year. The high demand growth in Tibet is expected to continue in 2017. There is limited time for additional production capacity to be utilized, and the economy is expected to remain high. Early infrastructure and other supporting facilities in the Tibet region are weak, and the growth rate of regional investment has remained at a high level for a long time. The CAGR for urban fixed asset investment, highway construction fixed asset investment, and cement production in 2009-2016 was 25%, 30%, and 19%, respectively. The fixed asset investment plan for 2017 was 200 billion yuan, an increase of 25% over the previous year, of which 52 billion yuan was planned for highway construction, an increase of about 30% over the previous year. It is expected that the time for the region's new production capacity to be utilized in 2017 is limited, and supply and demand will continue to be tight. The company's new line was put into operation in 2017, and the profit upward elasticity was strong. Currently, only Huaxin Cement and Company have plans for a new line in Tibet. Among them, the company's 4000 t/d production line is expected to be the first to be put into operation in September 2017, adding equity and clinker production capacity by about 30%, which is expected to drive the company's profit to continue to grow significantly. Maintain a “buy” rating. More than 80% of the revenue of the Tibetan government comes from central transfers and tax rebates, and infrastructure investment funds are easily implemented. It is one of the few regions in the country where the actual growth rate of fixed asset investment has exceeded the planned growth rate for a long time. We expect the company's 2017-2019 EPS to be about 0.79 yuan, 1.23 yuan, and 1.27 yuan, 20 times that of PE in 2017, with a target price of 15.80 yuan. Risk warning. Demand has fallen more than expected, and raw material prices have risen more than expected.