Incident: The company released its annual report on March 28. For the full year of 2016, the company achieved operating income of 1,131 billion yuan, a year-on-year increase of 6.97%, net profit of 14.155 million yuan, a year-on-year increase of 2.86%, net profit of 10.2516 million yuan, a year-on-year decrease of 13.70%, and cash flow from operating activities of 136 million yuan, an increase of 30.12% over the previous year. Key investment points: Revenue increased slightly, net profit was basically the same throughout 2016, achieving operating income of 1,131 billion yuan, a year-on-year increase of 6.97%, and a gross profit ratio of 23.77%, which is basically the same as the previous year. Among them, sales of pesticide products reached 20,898 tons, sales volume increased 15.48% year on year, gross margin increased by 0.7 pct to 24.67%, and 9494 tons of fine chemical products, achieved revenue of 129 million yuan, a year-on-year decline of 28.90%, and gross margin fell 2.87pct to 21.93%. Construction installation and technical services achieved revenue of 15.04 million yuan and 35.68 million yuan respectively. New projects continue to advance, and deepening cooperation with multinational companies to promote the development of the company's heterocyclic pesticides and intermediates industrialization bases continues to advance. 500 tons/year of salicynitrile is under construction, 4,000 tons/year of sulfuric anhydride is basically completed. At the same time, construction of environmentally friendly pesticide projects will be initiated and efforts will be made to complete the pilot trial of pyrazole ether ester and xazovir pilot studies. These projects can promote the replacement of the company's highly toxic pesticides, avoiding the business risks caused by a single variety. Furthermore, the company has comprehensively strengthened foreign registration, deepened cooperation with multinational companies, raised the level of cooperation, enhanced the competitiveness of the company's industry, and ensured the company's continuous and steady operation and development. Profit forecasts and risk alerts. From 2017 to 2019, the EPS is expected to be 0.21 yuan, 0.35 yuan, and 0.56 yuan respectively, and the PE corresponding to the stock price of 11.49 yuan on March 27 is 54X, 33X, and 21X respectively. Given the company's excellent product process and excellent fund-raising project structure, state-owned enterprise reform is expected to rejuvenate the company and maintain its “recommended” rating. Risk warning 1): State-owned enterprise reform progress falls short of expectations; 2): The pesticide industry continues to be sluggish