Core view: Revenue increased slightly in 2016, and net profit increased significantly. In 2016, the company achieved operating income of 4.393 billion yuan, an increase of 3.18% over the previous year; achieved net profit attributable to shareholders of listed companies of 452 million yuan, an increase of 21.67% over the previous year. Among them, revenue from LED light sources and lighting products was 3,674 billion yuan, up 17.97% year on year; revenue from energy-saving lighting sources and lighting products was 658 million yuan, down 39.80% year on year. In 2016, the company's LED business accounted for 83.6% of revenue, and the transformation into a new LED display lighting company has basically been completed. The 2017 revenue guide increased significantly. Net profit was affected by changes in exchange profit and loss. According to the 2017 operating plan disclosed in the company's annual report, the 2017 operating income is expected to be 5.415 billion yuan, up 23.26% year on year; operating costs of 4.150 billion yuan, gross margin of 23.4%; and net profit attributable to shareholders of listed companies was 463 million yuan, up 2.43% year on year. The company's net profit target for 2016 has been exceeded, with exchange profit and loss having a significant impact. However, the impact of exchange gains and losses in 2017 is relatively uncertain, and the net profit guidance target given by the company is relatively low. According to the 2017 quarterly report forecast, the company's net profit attributable to shareholders of listed companies increased by about 15% year-on-year in the first quarter of 2017. We expect that the company will be under less pressure to achieve the annual net profit target, and there is a high probability that it will be exceeded. The profit forecasting and valuation company is a leading lighting company that continues to operate steadily. In 2017, the company will also promote the growth of the company's performance by increasing the degree of automation, strengthening cost control, and expanding more downstream channels. We expect the company's EPS in 17-19 to be 0.35/0.43/0.52 yuan/share, respectively. We are optimistic about the company's long-term development, give the company a “buy” rating, and continue to recommend it. Risk warning: the risk that the boom in the LED industry falls short of expectations; the risk of a sharp drop in the price of LED products; the risk of a sharp rise in raw material prices; the risk of major industry policy changes; and the risk of large exchange rate fluctuations and exchange gains and losses.