Report summary: The company released the 2016 annual report and the 2017 quarterly report. The annual report achieved operating income of 1,992 billion yuan, an increase of 36.77% over the previous year, and realized net profit attributable to shareholders of listed companies of 67 million yuan, a year-on-year increase of 328.87 million yuan; the company's quarterly report achieved operating income of 939 million yuan, an increase of 124.10% over the previous year, and realized net profit attributable to shareholders of listed companies of 71 million yuan, an increase of 473.59% over the previous year. Sales of excavators and piling machinery have picked up, and operating income has increased dramatically. Since the second half of last year, benefiting from the commencement of regional infrastructure projects and the recovery of downstream demand for coal mines, the construction machinery industry has begun to pick up. The company's annual report for excavators was 636 million yuan, an increase of 46.35%, rotary drilling rigs and pile presses of 786 million yuan, an increase of 23.81% over the previous year. The company's annual sales increased sharply by 36.77%, and the overall gross margin of the company's products increased by 5.14 percentage points, from 28.25% to 33.39%. The company's pilers and excavators account for 70% of revenue, and the recovery in sales is expected to bring greater profit elasticity. The company is mainly engaged in piling machinery and excavators, and is a leading enterprise in the domestic piling machinery industry. The ZYJ series hydraulic static pile press has a stable market share at home and abroad, and has been responsible for drafting standards in the hydraulic pile press industry. The company's pilers and excavators account for 70% of revenue. Currently, sales of excavators and piling machinery are intense, and supply is in short supply. At one end, the increase in sales drives revenue growth, and the other end is that cost reduction drives an increase in gross sales margin. Seen from this perspective, the construction machinery sector is expected to bring huge profit elasticity to the company. The acquisition of AVMAX will build the entire general aviation industry chain and bring performance support to the company. The company purchased 100% of Canada's AVMAX shares at a price of 1,979 million yuan. Currently, the first phase of 60% of the shares has been handed over. AVMAX specializes in aircraft maintenance, repair and operation (MRO) services, as well as aircraft refurbishment, leasing and charter services. It is a high-quality company in the field of general aviation operations and has strong profitability. This year, AVMAX2016 merged, and the aviation sector achieved revenue of 224 million yuan and net profit of 83 million yuan, and later provided performance support to the company. Investment recommendations and ratings: The company's net profit for 2017-2019 is estimated to be 257 million yuan, 291 million yuan and 316 million yuan, EPS is 0.34 yuan, 0.39 yuan, and 0.42 yuan, and price-earnings ratios are 25 times, 22 times, and 21 times, respectively. Give it an “Overweight” rating. Risk warning: accounts receivable risk, AVMAX's revenue falls short of expectations