The performance was in line with expectations, and Sichuan Changhong announced 2016 results: operating income of 67.18 billion yuan, up 3.59% year on year; net profit attributable to the parent company was 550 million yuan, which turned a loss into a profit over the previous year, corresponding to a profit of 0.12 yuan per share. First quarter of 2017: Operating income was 16.63 billion yuan, up 7.9% year on year, and net profit attributable to parent company was 32.98 million yuan, down 84.7% year on year, corresponding to profit of 0.01 yuan per share. Holding subsidiaries: 1) Meiling Electric's 2016 revenue was 12.5 billion yuan, up 20% year on year, and net profit was 220 million yuan, up 731% year on year. Revenue for the first quarter of 2017 was 3.67 billion yuan, up 25% year on year, and net profit was 61.3 million yuan, up 14% year on year. 2) Huayi reduced 2016 revenue by 6.97 billion yuan, an increase of 2% over the previous year, and net profit of the mother was 250 million yuan, an increase of 16% over the previous year. Revenue for the first quarter of 2017 was 2.09 billion yuan, up 13% year on year, and net profit was 52.66 million yuan, up 5% year on year. The company turned a loss into a difficult profit: 1) In 2015, the company lost a huge loss of 1.98 billion yuan and fell into a business crisis. 2) The company reversed losses in 2016. Considering the assessed value of assets of 244 million dollars, the company is basically close to the break-even point, but it is also superior to the operating situation in 2015. 3) In 2016, the color TV industry was fiercely competitive, and panel costs continued to rise. Although the market share of Changhong Color Television's shipment volume declined, there were no operating losses in this context, and the quality of operations improved. Development trends 2017 cost pressure: Although the upward pressure on panels faced by color TVs in 2017 was eased, the upward pressure on the raw material costs of white lights was quite high. Since the company's refrigerator is positioned as a second-tier brand, its ability to raise prices is weaker than that of first-tier brands. Furthermore, the company's compressor company Huayi Compression has also contributed to steady profits in the past. However, in the industrial chain, the premium ability for accessories is not as good as that of brand companies, and the profit pressure caused by rising costs in 2017 is not small. The profit forecast was lowered from the 2017/2018 EPS forecast by 5%, 0% to 0.09, 0.10 yuan. Valuation and recommendations Currently, the company's stock price corresponds to 42.6 x 2017e P/E. We maintained a neutral rating, but lowered our target price by 11.11% to RMB 4.00, which is 5.82% higher than the current stock price. Risk market competition risk; risk of rising raw material costs.