Key investment points: The expansion of production capacity drives performance growth, and the leading position is highlighted. On the evening of April 27, the company released its 2016 annual report, stating that it achieved operating income of 7.852 billion yuan during the reporting period, an increase of 35.65% over the previous year, of which revenue from silver series products accounted for 65.83%; net profit attributable to shareholders of the parent company was 145 million yuan, an increase of 22.69% over the previous year. The increase in the company's profit is mainly due to the increase in silver and lead prices due to the recovery of the global non-ferrous metals market, and the company's silver production capacity and production increased dramatically after the completion of the company's fund-raising project, the silver technology transformation and upgrading project. The production and sales revenue of the company's main products increased steadily during the reporting period. The annual production of electricity was 1,020.48 tons, an increase of 19.90% over the previous year; the production of lead was 109,600 tons, an increase of 11.18% over the previous year. It shows that the company's production capacity and comprehensive recycling capacity have further increased. In the future, it is expected to become the company that produces the most silver in the world, showing its leading temperament. The results for the first quarter were impressive. On the evening of April 27, the company released its report for the first quarter of 2017, stating that it achieved operating income of 2,231 billion yuan, an increase of 68.73% over the previous year; and realized net profit attributable to shareholders of the parent company of 478.574 million yuan, an increase of 48.76% over the previous year. The sharp increase in operating income was mainly due to the increase in silver production and sales volume and trading business in the current period. Profit is expected to continue to grow in the future due to the positive impact of rising prices of non-ferrous metals and the commencement of fund-raising projects one after another. Furthermore, the company has basically formed a silver-rich lead concentrate - lead anode clay - silver (and comprehensive recycling of other valuable metals) - deep processing of silver products - “Internet +” industry chain system, further building a “whole industry chain +” development model with silver as the core, which will further enhance the profitability level of the enterprise and consolidate its position in the industry. The three major fund-raising projects have injected new momentum, and future performance increases can be expected. During the reporting period, the company's three major fund-raising projects progressed smoothly, and it is expected that all of them will be put into operation in 2017. Among them, the “Baiyin Technology Upgrading Technology Reform Project” can greatly increase the production capacity of clean silver production and increase the company's share in the silver market; the “50,000 ton lead, ice, and copper slag resource comprehensive utilization project” project reached production in 2017, promoted the development of the silver industry chain, the creation of a circular economy, etc., and provided stronger new impetus for the company's future development; the advanced processing project for silver series products “China Yin Capital - Gold Silver City” is expected to be completed in 2017, increasing the company's advanced processing capacity and product added value, and expanding the company's industrial chain. The gradual completion and production of the three major fund-raising projects will enhance the company's development momentum, scale efficiency, and comprehensive resource recycling efficiency. Future development advantages are obvious. Capital operations accelerate the layout of the “whole industry chain”. The company completed the refinancing of non-public shares during the reporting period, raising 1.19 billion yuan to implement the “2000t/a high-purity silver clean extraction and expansion project”, the “30,000 t/a secondary antimony resource comprehensive utilization project”, and the “national enterprise technology center construction project”. After the project is officially put into operation, the company's silver production capacity will be greatly expanded, the comprehensive recycling capacity will be further enhanced, the level of technology research and development will reach a new level, and the company's overall competitiveness will be substantially improved. While consolidating its main business, the company is speeding up the “whole industry chain” development strategy layout. Through the acquisition of Tibet Gold and Mining Co., Ltd., the silver smelting industry chain is further extended upward to the exploration, mining and beneficiation business of upstream lead-zinc ore mines, greatly increasing lead-zinc mineral resource reserves, and improving market risk resistance and market competitive advantage. Profit forecast. The company's point of view, 1) Silver production is increasing year by year. In the future, it is expected to become the company with the largest silver production in the world and is in a leading position in the industry. 2) Continuously expand upstream and downstream. The upstream segment acquires mines, and the downstream segment lays out silver deep processing products to open up the entire silver industry chain. 3) Introduce employee shareholding, demonstrating the company's confidence and fully mobilizing the enthusiasm and cohesion of core employees. We expect the company's 2017-2019 EPS to be 0.54 yuan, 0.70 yuan, and 0.88 yuan, respectively. Referring to the same industry, Yintai Resources's unanimous PE forecast for 2017 was 44 times. We gave the company 45 times PE in 2017, with a target price of 24.30 yuan, and upgraded to a “buy” rating. Risk warning. There is a risk that the price of non-ferrous metals will decline, and future performance is uncertain.