Key investment events: Antong Holdings released its 2017 quarterly report. In the first quarter, Antong Holdings achieved operating income of 1.16 billion yuan, up 62.4% year on year; net profit of 120 million yuan, up 125.4% year on year; basic earnings per share of 0.11 yuan; net profit after deduction was 140 million yuan, up 165.4% year on year. Comment: Freight prices have risen, the scale of operations has expanded, and the company's performance increased dramatically in the first quarter. In the first quarter of 2017, domestic demand for iron ore, coal and other commodities was strong, and domestic trade container freight prices rose. The coastal container freight index issued by the Tianjin International Trade and Shipping Service Center increased 15.7% year on year; at the same time, the company accelerated development after listing, business scale expanded, and business volume increased. The sharp rise in volume and price has brought about a significant increase in the company's revenue and profit. Large-scale container leasing to accelerate business expansion. The company announced that its wholly-owned subsidiary intends to sign a container leasing contract with Yitong International Asset Management Co., Ltd., with a total contract amount not exceeding US$176.75 million. The announcement mentioned that recently, due to the continuous expansion and growth of the company's business scale and the obvious recovery of the market, demand for container containers has continued to grow, and there has been a quantitative gap. Up to now, the total number of containers operated by Antong Logistics is about 133,500 natural containers, of which the proportion of owned containers is about 53%, far exceeding current mainstream container logistics companies. Therefore, in order to respond flexibly to market changes and financial considerations, it is proposed to solve the container gap by leasing containers, but the supply of containers in the market is tight, so it is planned to sign a container rental contract with Yitong International for a total of no more than 70,000 units, and the contract period of no more than 7 years. If 70,000 containers are leased, the total number of containers operated by the company will increase by 52%, indicating that the company's business situation is improving and development is accelerating. The prospects for multimodal transport are promising. The company proposed in its annual report, “In 2017, it is planned to increase the collaborative operation of integrated waterways, railways and road transport resources, expand, refine, and strengthen the main container logistics business, further utilize the network advantages of multimodal transport and the platform foundation of informatization, and continuously expand and extend integrated logistics service capabilities.” Multimodal transportation using containers as transport units can improve transportation efficiency and achieve door-to-door transportation, and since there is no need to change boxes during transportation, it can reduce cargo damage and losses that may be caused by intermediate links and replacement, effectively reduce transportation costs, and improve transportation quality, which is the development direction of modern transportation. According to some data, the containerization rate of China's foreign trade goods has reached 80%, while the containerization rate of domestic trade goods is only about 30%. The proportion of container transport in developed countries is around 70%. The container rate of China's domestic trade goods still has a lot of room for development, and the prospects for multimodal transport are broad. Combined with railway reforms, multimodal transport has ushered in development opportunities. 1) The government vigorously promotes the development of multimodal transport. China's logistics costs remain high, and the development of multimodal transport is one of the effective ways to reduce logistics costs. The government has made strategic plans for the development of multimodal transport many times. In January 2017, 18 departments including the Ministry of Transport jointly issued the “Notice on Further Encouraging the Development of Multimodal Transport” to vigorously promote the development of multimodal transport. 2) Surplus rail freight capacity. China is vigorously developing high-speed railways. At present, high-speed railways can now meet most passenger transportation needs. The transportation capacity of ordinary railways has been effectively released, and the overall freight capacity of railways is surplus. Railway transport box transportation is an important part of multimodal transport, and is expected to usher in rapid development. 3) Road costs have risen due to excessive regulation. In August 2016, the Ministry of Transport revised the “Regulations on the Administration of Overloaded Transport Vehicles Driving on Highways” and began to strictly control overloading on highways. This will cause road transportation costs to rise sharply and further highlight the cost advantages of using waterways, railways, etc. for multimodal transport. 4) The mixed railway reform brings new opportunities. Railways are one of the seven major areas where the central government promoted mixed reform pilot projects in 2017. Railways used to be a shortcoming in multimodal transport. Driven by mixed reform, it is expected that the railway shortfall will soon break through. Profit forecast and rating: Multimodal transport has broad prospects and is currently ushered in development opportunities. The company, as a leading private multimodal transport enterprise, will clearly benefit, and there is huge room for growth. The company's high performance growth in the first quarter and large-scale container leasing show that the business situation is improving, and the company is developing at an accelerated pace. Driven by railway reforms, it is expected that companies will integrate railway transportation into their own logistics networks, gain advantages in scale and cost, and establish barriers. The company's 2017-2019 EPS is expected to be 0.49, 0.62, and 0.78 yuan, corresponding to PE of 34, 27, and 22 times. It maintains an “increase in holdings” rating, is strategically optimistic about the company's ability to integrate railways, highways, and waterways, and the direction of multimodal transport development, and suggests investors increase their allocation. Risk warning: Domestic trade demand has declined sharply, and the development of multimodal transport has fallen short of expectations