Key investment points The release of COSB's production capacity drove a rapid increase in revenue scale, benefiting from a recovery in industry prosperity in the second half of the year: 1) By business, the steady growth in sales volume drove the container bottom plate business to maintain rapid growth: the 275,000 m3 COSB project launched by the company in 2015 had a capacity utilization rate of 85% in 2016, and the company's floor board sales volume during the period was 167,400 m3, up 21% year on year, achieving revenue of 628 million yuan, up 18.09% year on year. In the field of civilian boards, the company is based on a high-end positioning, adopts a direct sales model, faces high-quality customers, undertakes large orders, and enters a period of rapid growth. The total sales of environmentally friendly panels was 156,600 m3, an increase of 50% over the previous year, and achieved revenue of 494 million yuan, an increase of 53.15% over the previous year. 2) On a quarterly basis, the company's Q1-Q4 achieved revenue of 347 million yuan, 273 million yuan, 358 million yuan, and 329 million yuan respectively, with year-on-year increases of 78%, 37%, 4%, and 12.5%, and the Q4 revenue growth rate rebounded (38% in Q4 net profit). The company's COSB production line has the characteristics of flexible production, and can balance the production of high, medium and low end board products at the same time. Production capacity can be seamlessly adjusted between different products such as container floor panels, COSB environmental protection board decorative panels, etc. Therefore, the company can flexibly invest production capacity according to changes in the market conditions of different board products. Demand in the bottom board industry was sluggish in the first half of the year. The company's environmental board business revenue increased 244% year on year. The bottom board demand in the second half of the year recovered, and the bottom board business revenue increased 18% year on year. The level of gross margin has declined, but it has maintained its leading position in the industry. The company achieved a gross profit margin of 39.56% during the period, down 1.32 percentage points from the same period last year, but still maintained its leading position in the industry. The container floor board business achieved a gross profit margin of 29.04%, down 1.83 percentage points from the previous year, and the gross profit margin of the environmental board business was 48.97%, down 1.93 percentage points from the previous year. The slight decline in gross margin was mainly due to an increase in raw material prices and an increase in manufacturing costs as a share of total production costs after the COSB production line was put into operation. It is worth noting that the gross margin for the whole year increased compared to the interim report, indicating that the gross margin of business in the second half of the year increased compared to the first half of the year. We expect to benefit mainly from the sharp rise in volume and price brought about by the recovery in the bottom half of the year. The decline in the cost rate for the period was mainly due to a decrease in the management expense ratio and the financial expense ratio. The company achieved a net profit margin of 29.35% in 2016, an increase of 3.22 percentage points over the same period last year. The increase in net interest rate was higher than the increase in gross margin. The company's fee rate for the period was 12.05%, down 4.81 percentage points from the same period last year, of which: 1) The sales expense ratio was 3.92%, which was basically the same as the same period last year. 2) The management expense ratio was 5.77%, a decrease of 2.77 percentage points. Looking at the spin-off, the significant reduction in intermediary agency expenses was the main reason for the decline in the management fee rate; 3) The financial expenses ratio was 2.36%, a decrease of 2.04 percentage points, stemming from the repayment of company construction funds and a decrease in long-term loans. Investment suggestion: The company is currently a leading company in the domestic container floor industry. After listing, it actively continued to expand and strengthen and consolidate its competitive advantage through endogenous epitaxial expansion. As demand for container manufacturing rebounds and the release of the company's production capacity, future performance is expected to continue to grow rapidly. We expect the company's 2017-2019 EPS to be 0.48, 0.58, and 0.70 yuan respectively. The current stock price corresponding to PE is 19, 16, and 13 times, respectively, maintaining the “buy” rating. Risk warning: container manufacturing boom declined sharply, business expansion fell short of expectations