The performance was in line with expectations. The company's revenue in 2016 was 213 million yuan, up 14.09% year on year; net profit attributable to shareholders of listed companies was 48.3765 million yuan, up 14.7% year on year; revenue for the first quarter of 2017 was 703,022 million yuan, up 85.91% year on year, net profit attributable to shareholders of listed companies was 4.7953 million yuan, down 30.99% year on year; as of March 2017, there were plenty of orders in hand, and orders with unrealized sales were about 730 million yuan. In 2016, the company invested 15.5952 million yuan in R&D, an increase of 42.55% over the previous year. A pioneer in the AFC equipment segment, with strong market expansion capabilities. The company specializes in R&D, production, sales and service of AFC equipment. The terminal equipment mainly includes automatic ticket vending machines, automatic ticket inspection machines and automatic recharging machines, and controls all core modules in the automatic ticket sales system other than the banknote module, so that it can effectively replace imports and achieve exports. As one of the participants in formulating technical specifications for AFC terminal equipment in the Shanghai Metro, the rail transit AFC terminal equipment projects undertaken by the company have now spread to dozens of large and medium-sized cities in China, successfully entering the Southeast Asian and South Asian markets. The company also pioneered its products into BRT (rapid transit systems), bus stations, and scenic spots, demonstrating its strong ability to grasp the market. By undertaking the Matsue streetcar project in 2016, the company used the streetcar market as a new sales growth point. Furthermore, seizing the reform of rail transit payment methods, the company developed mobile payment functions for ticket vending machines, QR code credit card functions, etc., to reform payment plans. Expand downstream from equipment providers to break through the direction of system integration. China's rail transit and equipment manufacturing market has broad prospects. During the 12th Five-Year Plan period, China's average annual investment in urban rail transit reached 245.8 billion yuan. It is estimated that during the 13th Five-Year Plan period, the average annual rail transit investment amount will reach 495.3 billion yuan, and construction of at least 500 kilometers will be completed every year. Rail transit AFC projects usually use two methods of general contracting and subcontracting. Most of the turnkey contracts are for system integrators to subcontract the equipment supply business to equipment suppliers. Faced with the current situation where large system integrators in the industry are beginning to extend upstream in the industry chain, the company has begun to respond positively by undertaking AFC system integration projects and setting up R&D teams. In August 2016, the company signed a strategic cooperation agreement on smart transportation and logistics with the Yuxi Municipal Government. Investment suggestions: The 2016 results are in line with expectations. The company is a pioneer in rail transit AFC equipment providers. It pioneered the expansion from subways to BRT, bus stations, etc., and streetcars will become a new sales growth point; the company is expanding in the direction of downstream system integration, and growth is steady. We expect the company's EPS for 2017-2019 to be 0.41, 0.47, and 0.54, respectively, maintaining the “Increased-A” investment rating, with a target price of 42 yuan for 6 months. Risk warning: Technology upgrades and new product development fall short of expectations.