Incident The company released its 2017 quarterly report. During the reporting period, the company achieved operating income of 450 million yuan, a year-on-year increase of 67.76%, and achieved net profit attributable to the parent company of 43.2272 million yuan, an increase of 2.15% over the previous year, and net profit after deduction of 36.2472 million yuan, a year-on-year decrease of 5.63%. The short review benefits from favorable demand and the release of production capacity in fund-raising projects. Since its establishment, the company's main business has focused on the modified plastics business. After nearly 20 years of development, it has ranked among the leading domestic peers in terms of R&D strength, customer resources, and product quality, with an annual output of about 200,000 tons of modified plastics. After the gradual release of production capacity at the new Suzhou base in 2016, operations also became normalized. Cost reductions, increased bargaining power, and tax increases brought about by scale effects have formed a new profit driving point. During the reporting period, benefiting from the continuous release of production capacity in fund-raising projects and the increase in orders from downstream customers in the fields of home appliances, automobiles, etc., modified plastics revenue increased by 108 million yuan year-on-year, driving the company's overall rapid revenue growth. Benefiting from the continuous growth of the modified plastics business, related business profits are expected to increase significantly year-on-year in 2017, and will also achieve steady and compound growth in the next few years, leading to steady growth expectations for the company's overall performance. CNC production capacity is gradually released, and profits are expected to improve month-on-month. Xingke Electronics completed changes in industrial and commercial registration procedures on January 11, 2017, and became a wholly-owned subsidiary of the company and included in the company's consolidated statement in March 2017. Since the fourth quarter of '16, Xing Ke Electronics' performance growth has been slowing down due to the LeTV mobile phone incident. The company is actively adjusting customer and product orders. It is expected that this impact will gradually be eliminated in the 2nd quarter of '17. Currently, the CNC business mainly comes from orders for major model products such as A customer, Xiaomi, Hammer, Meitu, and TCL. Shipments of related products are now gradually resuming after an early decline in production capacity. It is expected that as product shipments stabilize in the second quarter, the profit level of CNC-related businesses will gradually increase. The parent company's overall profit for the second quarter is also expected to increase significantly from month to month. The company is mainly engaged in the modified plastics business, which belongs to the plastics processing sub-industry. It is a key field of new material technology developed by the country, mainly used in the fields of home appliances, automobiles, electronic appliances, etc. The modified plastics industry is a typical industry benefiting from technological progress and consumption upgrades. The accelerated transfer of global automobiles, home appliances, office equipment, power tools, etc. to China has driven the development of the domestic modified plastics industry. At the same time, the upgrading of consumption has also led to an increase in market demand in the fields of automobiles, construction, home appliances, and IT processing in China. Since its establishment, the company has focused on the modified plastics business. After nearly 20 years of development, it ranks among its domestic peers in terms of R&D strength, customer resources, product quality, brand awareness, management level and marketing and sales network construction. The annual output of modified plastics is about 200,000 tons. It has established separate production bases in Humen Town, Daojiao Town, Dongguan, Guangdong, and Wuzhong District, Suzhou, making it one of the most important new polymer materials manufacturers in China. In particular, after the gradual release of production capacity at the new Suzhou base in 2016, operations also became normalized. Cost reductions, increased bargaining power, and tax increases brought about by scale effects have formed a new profit driving point. Competition in the modified plastics industry was fierce in 2016. Prices of upstream raw materials rose rapidly in the second half of the year, which also put some pressure on the company's modified plastics business operations. The company achieved the overall steady and rapid development of the modified plastics business by adjusting prices in line with market conditions, improving production efficiency, reducing costs, increasing new product promotion and customer development. In 2016, we achieved operating revenue of 1.3 billion yuan, an increase of 24.19% year on year, and realized gross profit of 227 million yuan, an increase of 22.78% year on year. During the reporting period, benefiting from the continuous release of production capacity in fund-raising projects and the increase in orders from downstream customers in the fields of home appliances, automobiles, etc., modified plastics revenue increased by 108 million yuan year-on-year, driving the company's overall rapid revenue growth. As customer orders in the modified plastics business continue to increase in the fields of home appliances, automobiles, etc., it is expected that profit in 2017 will increase significantly year-on-year, and will also achieve steady and compound growth in the next few years, leading to a steady increase in the company's overall performance. In 2016, the company purchased the remaining 66.2% of Xing Ke Electronics' shares through a combination of issuing shares and cash payments. On January 11, 2017, Xing Ke Electronics completed changes in industrial and commercial registration procedures, became a wholly-owned subsidiary of the company, and was included in the company's consolidated statements in March 2017. In 2015, Xingke Electronics transformed from a single process to a full process. Currently, it has established a full set of processes from CNC machining, metal polishing, laser engraving, metal T treatment, precision injection molding, metal sandblasting, and anodizing, and has entered the leading position of domestic CNC structural parts suppliers. With its rich business technology and management experience, strong R&D and production capacity, Xingke Electronics has established stable cooperative relationships with a number of domestic high-quality mobile phone brand customers and EMS manufacturers, such as OPPO, Xiaomi, Hammer, and Duowei. Since the fourth quarter of '16, Xing Ke Electronics' performance growth has been slowing down due to the LeTV mobile phone incident. The company is actively adjusting customer and product orders. It is expected that this impact will gradually be eliminated in the 2nd quarter of '17. Currently, Xingke Electronics' CNC business mainly comes from orders for major model products from A customers, such as Xiaomi, Hammer, Meitu, and TCL. Shipments of related products are gradually resuming after an early decline in production capacity. It is expected that as product shipments stabilize in the second quarter, the profit level of CNC-related businesses will gradually increase. The parent company's overall profit for the second quarter is also expected to increase significantly from month to month. Risks suggest changes in the supply and price of chemical raw materials; increased competition in modified plastics and downstream CNC products.