Incident: The company released its 2016 report on April 9. It was previously announced that major restructuring is expected to resume trading before May 9. The comments are as follows: The year-on-year increase of 29.81% in performance fell short of expectations. The company released its 2016 annual report, achieving annual revenue of 2,407 billion yuan, a year-on-year increase of 16.82%; realized net profit attributable to shareholders of listed companies of 125 million yuan, a year-on-year increase of 29.81%, corresponding to EPS of 0.18 yuan; the company achieved quarterly operating income of 693 million yuan in the fourth quarter, an increase of 28.12% over the previous year, a year-on-year increase of 29.29%, and net profit attributable to shareholders of listed companies of 77 million yuan, an increase of 174.03% over the previous year. According to business, sales revenue from the company's communications business increased steadily by 1.41%, and performance growth was mainly New businesses such as smart terminals increased 91.03% year-on-year, but early business layout, market development, and R&D investment led to higher management costs, and an impact on profits. The capital raised is in place, and there is huge space for smart terminals to start new business. In 2016, the company raised a fixed increase of 3.45 billion dollars to invest in the trillion-dollar OLED module and mask market, the 100-billion-scale USB3.1 TypeC connector, and the 10-billion-scale metal case project. The company is expected to open up new markets and usher in new growth with the technical advantages and manufacturing experience of its core equipment such as mask versions. At the same time, the company's subsidiaries are also deploying mobile terminals around the main communications business. For example, the subsidiary Daling Industrial's dual camera module and monocular iris recognition will soon enter mass production in 2017, meeting the total customer value requirement of 1 billion yuan and entering a stage of rapid growth. 4G network construction will continue to maintain a high level, and the filter business may pick up. In 2016, 4G networks developed steadily. In the next 2 years, with the popularity of 4G/4.5G networks and the rapid development of smart lifestyle applications such as virtual reality, mobile video, vehicle networking, and the Internet of Things, users' mobile data traffic demand will continue to grow rapidly in the next few years. In 2018, 2 million 4G base stations were added, and the communications industry maintained a high level of prosperity. The company will benefit significantly as the world's largest supplier of RF filters with a production capacity of more than 3 million sets. New energy vehicles continue to prosper, and automotive electronics continue to benefit. In 2016, new energy passenger vehicles continued to grow, and the production and sales growth rate increased by 50+% year-on-year. It is expected that the NEV boom will continue in 2017. The subsidiary Daling Industrial has cooperated with many domestic NEV manufacturers such as BAIC Yinxiang in terms of multimedia systems, ADAS systems, cameras, radars, etc., and continues to promote automotive electronics business. Profit forecast: Looking at the overall recovery of the 4G, smart terminal and new energy vehicle industry prosperity and continuous superposition of the company's own technology, capital, and layout in emerging fields such as OLED, VR, IoT, graphene, and new materials, is the driving force for the company's future growth. Considering that 2016 performance was lower than expected, we lowered our profit forecast for 2017-2018 to be 31.88/4.153 million, net profit of 226/277 million. The performance growth rate is 81.97%/22.54%, and EPS is 0.30 (-0.10) /0.36 (-) 0.11). Considering the company's major asset restructuring, the target price of 35 yuan was maintained for the time being, corresponding to PE116x in 2017, maintaining the “buy” rating. Risk warning events: fund-raising projects fall short of expectations; merger and acquisition effects fall short of expectations; asset injection rate slows