Key investment income rose, and net profit rebounded for the first time in three years. In 2016, the company achieved revenue of RMB 30,929 million, a year-on-year increase of 23.24%; gross margin was 13.91%. It was basically the same; net profit was 413 million yuan, an increase of 111% over the previous year. EPS was RMB 0.30 (2015:0.14 yuan), and the company paid a cash dividend of $0.03 per share. The main reason for the significant improvement in 2016 performance was the increase in sales scale, with revenue from thermal power mainframe equipment, power plant engineering services, and nuclear power business increasing sharply. The company's net profit increased significantly compared to the same period in 2016 after three consecutive years of decline. The revenue and share of the thermal power engine equipment and power plant services sector increased, and the share of overseas revenue increased. Looking at the business sector, the operating income of thermal power mainframe equipment was 12.170 billion yuan, an increase of 23.24% over the previous year, and the proportion of revenue increased to 39%; the revenue of power plant engineering services was 99.13 billion yuan, an increase of 45 percent over the previous year, accounting for 32% of revenue (2015:27%). From a regional perspective, the company will accelerate the pace of going global and actively expand into overseas markets in the future. In 2016, overseas revenue was 10.1 billion yuan, up 52.67% year on year, and the proportion of total revenue increased to 33% (2015:26%). Major markets include Asia and South America. In the future, as China's Belt and Road strategy continues to advance, both overseas equipment sales and EPC business will benefit from market expansion and preferential credit conditions, and the company's share of overseas business revenue will continue to increase. Our view: Harbin Electric (1133.HK) is the oldest manufacturer of large-scale power generation equipment in China. The company has a broad layout in the coal power industry. In the context of the removal of production capacity from coal power, the company's revenue in the thermal power mainframe equipment sector has declined, and it is expected that it will continue to decline. The company leverages its technological advantages to actively transform into an energy manufacturing service provider, and the power plant engineering service sector has achieved rapid growth. The future business performance of the company's thermal power transformation market and overseas business expansion along the Belt and Road are our focus of attention. According to Wind's unanimous forecast, the company's forecast for EPS in 2017 is about 0.46, corresponding to the current stock price of P/E about 9.3 times and P/B about 0.4 times. The company has sufficient orders on hand, and performance is expected to resume continuous growth. Investors are advised to pay active attention. Risk warning: Equipment business gross margin declined, order execution risk, and overseas business fell short of expectations.