Events: Baoshuo Co., Ltd. achieved operating income of 1.1 billion yuan (YoY +220%) in 2016; net loss of net profit of the parent company of 140 million yuan; total assets of 29.9 billion yuan (YoY +4326%), and net assets of 14.8 billion yuan (YoY +4090%). The securities business has become the main business, and diversified development momentum is good. In 2016, the company issued shares to purchase 95.01% of Huachuang Securities's shares and raised 7.36 billion yuan in supporting capital. After the restructuring was completed, Huacheng Securities became a holding subsidiary of the company, and the company will gradually be restructured into a holding management platform with securities business as the core. (1) Supplementing capital to improve performance. In December 2016, the company used the net amount of raised financing of RMB 7.36 billion to increase capital and expand the shares of Huacheng Securities. By the end of 2016, the net assets of Huacheng Securities owned by the parent company had risen to 11.2 billion yuan (YoY +226%). The additional capital will be invested in businesses such as self-operated securities business, credit trading business such as securities financing, etc., active management asset management business, new third board market making business, and direct capital investment subsidiaries, etc., which is conducive to further enhancing the core competitiveness and profitability of the company's securities business. (2) Self-management enriches the investment structure and strengthens regional advantages in asset management. The company plans to allocate about 3 billion yuan of capital to increase the scale of its self-operated business, of which about 500 million yuan will be invested in equity securities to enrich the variety of self-operated investments and optimize the business structure. In terms of asset management business, in 2016, Huacheng Securities achieved asset management business revenue of 130 million yuan and management scale of 224.3 billion yuan, gradually forming a regional market centered on Guiyang, Beijing, Shanghai, Shenzhen and Chengdu. (3) Leading small to medium brokerage firms in IPO reserves. In 2016, Huacheng Securities achieved securities underwriting and sponsorship business revenue of 140 million yuan (accounting for 88% of investment banking business). Based on traditional investment banking business, Huacheng Securities has made some progress in non-traditional investment banking markets such as small and medium-sized enterprise private equity bonds and recommended listing services. According to Wind statistics, Huacheng Securities has accepted and received feedback on 5 IPO projects, and IPO project reserves are at a high level among small and medium-sized brokerage firms. (4) Establish a “big broker” service system and expand the scale of credit transactions. According to Choice statistics, the market share of Huacheng Securities's stock base trading volume increased to 0.254% (YoY +1.1 BP), ranking 3 to 67. Relying on a comprehensive financial service platform, Huacheng Securities enhances the intelligence of Internet services and establishes and improves the “big brokerage” service system, which will help continue to increase its market share. It is estimated that in 2017, the market share of Huacheng Securities will increase to around 0.27%, and the stock base transaction volume will exceed 1 trillion yuan. According to Wind statistics, in 2016, Huacheng Securities had a balance of 1.6 billion yuan, a market share of 0.17% and is basically the same as in 2015. The scale of the company's proposed securities financing business is about 10 billion yuan, and the scale of stock pledge repurchase transactions is about 2 billion yuan, which will help raise the revenue level of the company's credit trading business. (5) “Broker+financial asset exchange” has obvious advantages. Huacheng Securities was one of the first brokerage firms to pilot Internet securities. By holding companies such as the Guizhou Stock Exchange Center and the Liquor Exchange, Huacheng Securities pioneered the “Internet+Underlying Capital Market” non-standard asset securitization service model, established a non-standard asset business system framework, and formed the competitive advantage of a “broker+financial asset exchange”. Real estate and building materials benefit from the Xiong'an New Deal. (1) Land reserves are abundant, and there is plenty of room for appreciation. In 2013, the company's joint venture (40% shareholding) Baoshuo Real Estate and its subsidiaries competed for 290,000 square meters of state-owned construction land in Baoding, Hebei. According to statistics from Housing Search Network, as of March 2017, housing prices in Baoding were about 13,000/square meter. The Baoding region has excellent geographical and transportation conditions. Benefiting from the construction of Xiong'an New Area, the company's land reserves have a lot of room for appreciation. (2) New district infrastructure brings more opportunities to the building materials business. 60% of the revenue from the company's building materials business comes from North China, and the “Baoshuo” brand plastic pipe profile products produced have a certain level of brand awareness. Moreover, due to the low production capacity of plastic pipe profile products in Hebei and neighboring provinces, the company's products have a certain advantage in market share in this region. Infrastructure and real estate construction in Xiong'an New Area will bring more business opportunities to the company. The equity structure is scattered, and the management mechanism is flexible. After the company restructuring was completed in 2016, New Hope and its co-actors held a total of 17.17% of the shares. Seven of the top ten shareholders of the company were private enterprises or natural persons. Scattered equity and shareholders with private capital backgrounds enabled the company to maintain a flexible management mechanism. Investment advice: Buy -A investment rating, target price of 22 yuan for 6 months. We expect the company's EPS from 2017 to 2019 to be 0.31 yuan, 0.38 yuan, and 0.46 yuan, respectively. Risk warning: risk of a sharp decline in the market, credit risk, company operation risk