1. Event Overview The company released its 2016 annual report and 2017 quarterly report. In 2016, it achieved operating income of 3.739 billion yuan, an increase of 7.52% over the previous year; net profit of 394 million yuan, an increase of 33.80% over the previous year; and earnings per share of 1.22 yuan. The first quarter of 2017 achieved operating income of 889 million yuan, an increase of 1.72% over the previous year; net profit of 59.934 million yuan, an increase of 2.87%; and earnings per share of 0.19 yuan. It is planned to distribute cash dividends of 3 yuan (tax included) for every 10 shares, for a total of 97.11 million yuan. 2. Analysis and judgment. The main business is developing steadily, and the world-leading companies with yarn-dyed cloth production capacity are operating steadily, benefiting from factors such as increased profits after the merger of Yuanlian Thermal Power (now Lianfa Environmental Renewable Energy), subsidiaries Lianfa Tianxiang Printing and Dyeing and Lingcai Weaving, loss reduction, improved management standards, and exchange earnings from RMB depreciation. Performance increased rapidly in 2016. At present, the company has an annual production capacity of 210,000 spindles of cotton yarn, 160 million meters of yarn-dyed cloth, 60 million meters of printed and dyed cloth, 11 million pieces of shirts, 30 million meters of home textile fabrics, and 6,000 tons of knitted yarn and knitted fabric dyeing. Among them, the production capacity of yarn-dyed fabric ranks second in the world. The company's order volume declined slightly year-on-year in January 2017 and recovered in February and March. We believe that the company's performance is expected to maintain steady growth in the future. Expanding the field of environmentally friendly new energy, cultivating new profit growth points, the company's environmental protection and new energy sector layout continues to deepen. The wholly-owned subsidiary Lianfa Environmental Renewable Energy achieved operating income of 303 million yuan and net profit of 66.21 million yuan in 2016. Currently, revenue mainly comes from electricity, steam, sewage treatment, etc. In the future, it is expected that straw power generation, biomass power generation, sewage treatment, solid waste treatment, etc. will be used as development directions to cultivate new profit growth points. Actively integrate into the “Belt and Road”, promote global layout, actively integrate the company into the “Belt and Road” strategy, and integrate overseas resources. It already has three garment factories in Cambodia. In 2016, an investment intention agreement was signed with the Ethiopian government. It is planned to build a textile industrial park integrating spinning, printing and dyeing cloth, yarn-dyed cloth, and ready-to-wear in Ethiopia. In the future, it is expected that it will rely on advantages in tariffs, labor resources, and raw materials to enhance global competitiveness. 3. Profit forecasting and investment suggestions suggest the steady development of the company's main business and promote global layout. Deepen the expansion of the environmentally friendly new energy sector and bring new profit growth points. The 2017-2019 EPS is expected to be 1.34/1.52/1.68 yuan, and the corresponding PE is 12/11/10 times, maintaining the “highly recommended” rating. 4. Risks suggest that new business expansion falls short of expectations, exchange rates fluctuate, and raw material prices rise.