Investment suggestion: the company maintained a high growth of more than 25% in 2016 and 2017Q1 revenue, mainly benefiting from the substantial increase in the chemical trade scale of Qihua net. As the only listing platform of Guangzhou Light Industry Group, the group asset securitization rate and industrial fund extension are expected to be promoted. Considering the downside of the company's chemical trade gross profit margin, the company will lower its 2017-2018 EPS to 0.11,0.15 yuan (- 0.09) yuan. It is estimated that 2019 yuan will be EPS0.18. With reference to the industry average of 2017 PS0.7X, the target price will be lowered to 15.8 yuan, maintaining the "overweight" rating.

The rapid growth of chemical trade scale of Qihua Network has led to a high growth rate of income. The company achieved revenue of 9.849 billion yuan in 2016, an increase of 30.10% over the same period last year, and a net profit of 39 million yuan, an increase of 23.34% over the same period last year, slightly lower than market expectations. Qihua achieved a transaction volume of 15.975 billion yuan in the whole year, of which self-sales totaled 4.071 billion yuan, an increase of 364 percent over the same period last year, and a profit of 4.26 million yuan, reversing losses over the same period last year. Affected by the increase in the proportion of industrial products with low gross profit margin, the company's gross profit margin decreased by 0.65pct compared with the same period last year, but the fee control effect was good, and the overall expense rate of the three items decreased by 0.78pct. The company's 2017Q1 achieved revenue of 2.162 billion yuan, an increase of 26.25% over the same period last year, and a net profit of 7 million yuan, an increase of 56.22% over the same period last year, continuing the high growth trend of revenue and profit.

With the steady progress of the daily chemical platform, the collection and storage has been temporarily promoted, but the land value has been highlighted. As the only listing platform of Guangzhou Light Industry Group, the company complies with the direction of state-owned enterprise reform in Guangzhou, improving the overall asset securitization rate of the group and setting up M & A funds to integrate high-quality daily chemical resources have always been the key work direction of the company. The company Tianhe District old factory area of 120000 square meters of land collection and storage has yet to be approved by the government, no progress has been made, if there is a breakthrough in the future, it will provide strong support for the development of the company.

Risk hint: the gross profit level continues to decline; the reform process of state-owned enterprises is not as expected.