Report summary: Event: The company released its 2016 report. The company achieved operating income of 1.52 billion yuan, an increase of 44.18% over the same period last year, and net profit of 18.7 million yuan, an increase of 111.84% over the previous year, turning a loss into a profit. The company's traditional industry continues to maintain a civilized development trend and maintain good profitability; the sales scale of the supercapacitor system industry in the rail transit industry increased sharply year on year, and its share in the main business gradually increased; after New Construction Commuter obtained production qualifications for new energy buses and urban logistics vehicles, the main focus changed to vigorously developing the new NEV industry; the company focused on developing new industries such as rail transit to concentrate effective resources, and divested the construction machinery industry and disposed of inefficient assets. The card slots are accurate, and the tram layout has been concentrated for many years: Xinzhu Co., Ltd. is the only general contractor for subways and trams in China other than CRRC that has qualifications, production capacity, technology, and historical performance. The company has been in development for 5 years. Currently, it has systematically mastered the three core key technologies of tram lines — vehicle technology, track system technology, and “four-electric” integrated control technology, and has achieved industrialization, and is in a leading position in the country in terms of the length of the industrial chain. Actively participated in the three streetcar projects of Xinjin, Yibin and Chengdu IT Avenue: in 2016, the first batch of PPP promotion projects in Chengdu in 2016 was “released”. There were 39 projects with a total investment of 126.2 billion yuan. Among them, there were 4 projects involving rail transit (including trams), totaling 34.49 billion yuan, including the Chengdu Rail Transit Line 18 project PPP project (26.5 billion), and the modern streetcar project on Xiangcheng Avenue in Xindu District (1.5 billion), etc., of which streetcars totaled 7.99 billion yuan, huge market space for the local community. Stock development provides a favorable external environment. Reducing holdings, introducing war investment, innovating business models, and solving order problems: On August 23, 2016, the company issued a notice on August 23, 2016 to reduce the holdings of Juying Technology, the controlling shareholder. The two plan to reduce the company's shares by no more than 70 million shares in total, accounting for 10.85% of the company's total share capital. The main purpose of this reduction in holdings is to introduce strategic investors, innovate business models, and use the advantages of war investment to solve capital and project problems, while expanding to the whole country. Investment recommendations and ratings: We expect the company's net profit in 2017-2019 to be 1.52 yuan, 258 million yuan and 364 million yuan, EPS of 0.24 yuan, 0.40 yuan and 0.56 yuan, and PE 43 times, 25 times and 18 times, giving it an “increase in holdings” rating. Risk warning: tram business falls short of expectations