Events: The company released its 2016 annual report. The company achieved operating income of 317 million yuan in 2016, an increase of 3.88%; realized net profit of 33.5486 million yuan, a year-on-year decrease of 21.96%; net profit after deducting non-net profit of 42.859 million yuan, an increase of 10.40% over the previous year; and basic earnings per share of 0.36 yuan, a decrease of 21.96%. The company's revenue increased slightly, and profit decreased by 21.96% year over year. In 2016, the company's revenue and net profit increased by 3.88% and decreased by 21.96% year on year, respectively. The main reasons for the decline in profit include a 24.59% year-on-year increase in management expenses, book losses of 9.6614 million yuan due to scrapping of used assets, 8.4499 million yuan of non-operating expenses due to ship impairment preparations, and 2.48 million yuan in non-operating expenses due to payment of compensation for cancellation of agreements. Gross margin and net profit margin were 58.55% and 10.41%, respectively, up 3.78 percentage points and down 3.70 percentage points from the previous year. The fee rate for the period was 34.83%, an increase of 2.10 percentage points over the previous year. The fixed increase project was approved to help build the Zhenjiang project. On November 2, 2016, the company's fixed increase project was approved by the Securities Regulatory Commission. This fixed increase raised a total of 790 million yuan to invest in the construction of the Zhenjiang Magic Sea World project. The project is expected to be completed and put into use by the end of 2017. After completion and operation, it is expected to contribute 434 million yuan in revenue and 160 million yuan in net profit. The company holds 70% of the shares in the project, and will further increase the company's performance in the future. Offsite replication projects have blossomed in many places, and the Yangtze River Delta region has been comprehensively laid out. On December 14, 2016, the company announced the launch of a number of offsite replication projects and the signing of relevant cooperation agreements. The company will fully enter the Yangtze River Delta region and popular tourist destinations such as Xiamen and Sanya. The Yangtze River Delta region has a high level of economic development, intensive transportation networks, and high demand for leisure travel from residents. Offsite marine park projects benefit from this, and are expected to form a new profit growth point for the company in the future. At the same time, compared with the Northeast region where the company is based, the Yangtze River Delta region has few seasonal differences, which is conducive to calming the seasonal fluctuations in the company's business performance. Non-public issuance of bonds+investment in cultural tourism funds to create funding conditions for the development of new projects. The company solved the funding problem for offsite projects by issuing 500 million yuan of non-public bonds and applying for an investment amount of not more than 1 billion yuan for tourism and cultural private equity funds to invest and finance tourism and cultural projects. At the same time, the company acquired 80% of Ogilvy Fund's shares, and Ogilvy Fund will act as the fund manager for the company's private equity fund. Investment rating and valuation: It is estimated that in 2017-2019, the company's EPS will be 0.68 yuan, 0.82 yuan and 0.96 yuan respectively. Maintain a “Recommended” rating. Risk warning: passenger flow falls short of expectations, construction progress of new projects falls short of expectations