[Event] Baoshuo Co., Ltd. achieved operating income of 1,115 billion yuan in 2016, an increase of 220% over the previous year; net profit of the mother was 142 million yuan, corresponding to EPS of -0.22 yuan. Since September, Huacheng Securities has been merged into the company report. In 2016, Huacheng Securities contributed 782 million yuan in revenue and net profit - 66 million yuan. The decline in the performance of Huacheng Securities was mainly due to losses in the fourth quarter in the bond market. Huacheng Securities achieved full-year revenue of 1,956 billion yuan in 2016, -17.61% year-on-year; realized net profit of 408 million yuan, -40.98% year-on-year, lower than our expectations, mainly due to high bond losses in the fourth quarter. Considering that the company lost a lot in its own bonds in the fourth quarter, the decline was still lower than the industry average. We believe that the company's business structure and development strategy are remarkable, and the momentum for future performance growth is strong. After Huacheng Securities increased its capital and expanded its shares, the capital-consuming business received financial support. As of the end of 2016, Huacheng Securities had total assets of 25.613 billion yuan, +116.87% year-on-year; net assets of 11.158 billion yuan, +226.44% year-on-year. After capital increases and stock expansion, the company's capital consuming businesses, such as securities financing and stock pledge business, received financial support. At the end of 2016, the company had a market share of about 1.6 billion yuan, with a market share of only 0.2%; at the end of 2016, the market value balance of stock pledges pending repurchase was 20.8 billion yuan, an increase of several times over the end of 2015. Actively lay out non-standard business and become a major investment bank in the broad sense of the word. Two major local exchanges+internet financial platforms = large investment banks in the broad sense of the word. The company actively lays out non-standard business. Through Jinhui Capital, it holds 40% of the shares in the Guizhou Liquor Exchange and indirectly controls the Guizhou Equity Financial Asset Exchange Center to achieve a combination of investment and financing, comprehensively open up asset management business and investment business, and get involved in a broad range of major investment businesses. A number of non-standard products designed by the company had excellent sales scale and earnings performance on its Jinhui Financial Platform, opening up the entire business chain investment banking model. In September-December, the company achieved investment banking business revenue of 161 million yuan, accounting for about 20% of revenue, and is expected to account for more than 25% of annual investment banking revenue. The investment and research service capabilities are leading, and the commission advantage is strong. The company's research team consists of more than 100 doctorates and masters, and has strong R&D advantages in macroeconomics, the New Third Board, and the communications, power equipment and new energy industries. Since its establishment in 2009, team building has been continuously strengthened, and significant progress has been made in terms of research capabilities and service levels. The share of public funds in the market segment is much higher than the company's brokerage share. The company is based in Guizhou, has strong bargaining power locally, and the commission rate is higher than the industry average. Introduce equity incentives to activate the vitality of brokerage firms. The company's equity structure is scattered, and it is the only brokerage firm in the industry to introduce an employee stock ownership plan. The total amount of shares held by employees of the four major platforms before supporting capital raising in the fourth quarter of '16 was 4.99%. The total share after ancillary fund-raising was 2.08%. The company still has plans to carry out employee stock ownership plans in the future. [Investment Suggestion] The 2017 EPS of Baoshuo Stock is expected to be 0.62 yuan. Using the segmented valuation method, the target price was 19.80 yuan, corresponding to 2017 EP/E 31.8x, corresponding to 2017 EP/B2.17x, maintaining the “buy” rating.