Incident: The company released its 2016 annual report. The company achieved total revenue of 1,843 billion yuan in 2016, an increase of 22.43% over the same period of the previous year; net profit to mother of 508.8861 million yuan, an increase of 6.43% over the same period of the previous year; EPS was 0.38 yuan, an increase of 6.45% year on year. The main business was operating steadily, and growth in the four major sectors boosted performance. The company's revenue in 2016 increased by 22.02% year-on-year, mainly due to revenue growth in the four major business segments of road passenger transportation, waterway tourism, automobile sales and supply chain services. In terms of the automobile sales industry, stimulated by the 2016 vehicle purchase tax halving preferential policy and the double influence of the addition of 4S automobile stores, the company's automobile sales scale further expanded. The company's vehicle sales increased 17% year on year, and revenue increased 17.64% year on year. At the same time, the company is actively transforming towards tourism services, actively exploring new profit models such as “Cruise +”, and developing a new travel product “Yangtze River Night Tour”, bringing new business growth points to the company. In terms of period expenses, sales expenses and management expenses increased by 8.84% and 17.57%, respectively, and financial expenses decreased by 5.74% year on year. The reason for the rapid increase in management expenses was the increase in labor costs due to the establishment of a new transportation company. Yichang is rich in tourism resources, and its position as the Three Gorges travel platform is prominent. The Three Gorges of the Yangtze River landscape is famous at home and abroad. The parent company, Yichang Travel Group, has a large number of high-quality tourism resources and fully supports the company in developing the tourism industry. Yichang Transportation Group carries the mission of leading the development of the 100 billion cultural tourism industry, and as the group's only listing platform, the company will become an integrated platform and financing platform for integrating tourism assets in the Three Gorges region. The company is building a Yangtze River Three Gorges tourist transportation complex supported by elements such as “Three Gorges” series cruise ships as carriers, tourist distribution centers, and travel agencies. At the same time, in the context of the acceleration of state-owned enterprise reform, the company is expected to benefit from the policy dividends brought about by the national reform in the future. A planned increase will be held, and the fund-raising project will help the company develop. On March 22, the company's application for a fixed increase was reviewed and approved by the Development and Review Committee of the Securities Regulatory Commission. The fixed increase plan plans to raise no more than 1 billion yuan for the first-level land development of the Yangtze River Three Gorges Cruise Center and the Yichang East Railway Station logistics project. After the completion of the project, the modern logistics service business will become a new source of profit for the company. Investment rating and valuation: In 2017-2019, EPS is expected to be 0.50 yuan, 0.62 yuan, and 0.75 yuan, respectively. Maintain a “Highly Recommended” rating. Risk warning: The transformation progress is weaker than expected, and the growth of the travel business falls short of expectations.