Incident: The May 13 announcement shows: ① Liu Nianxin, the company's controlling shareholder and actual controller, and his spouse plan to increase their holdings of the company by no more than 2% of the company's total share capital within one year, and promise not to transfer their company shares within the next 12 months; ② Liu Nianxin, the controlling shareholder and actual controller of the company, and his spouse jointly increased their holdings by 9.73 million shares through collective bidding from May 11 to 12, accounting for 0.33% of the total share capital. The average price of this increase was 6.45 yuan/share. After the increase, Liu Nianxin and his spouse held a total of 30% of the company's shares. Core view: At the inflection point of Q1 performance in '17, the increase in shareholders' holdings shows confidence. The company benefited from the addition of 1.1 billion yuan of new orders from the main decoration industry in Q1 in '17 and the resumption of normal operations in the education sector+completion of the Internet upgrade. In '17, Q1 revenue increased 256% month-on-month, and net profit increased by 164% month-on-month. Both were far higher than the average of the company's Q1 revenue and profit growth rates of 37% and 24% over the previous five years, showing inflection point growth. The majority shareholders increased their holdings of the company by 62.78 million yuan and promised not to reduce their holdings for 12 months, demonstrating confidence in the company's development prospects and recognition of its value. The building decoration industry is entering an era of “stock+incremental” development, and the company's internal reforms and optimization drive development. After experiencing the “golden decade” of newly developed building decoration, the building decoration industry has now ushered in the “platinum decade” of stock renovation+new building decoration. The “Blue Book on Building Decoration in China” predicts that the growth rate of the total output value of building decoration in 2016-2020 will be higher than the GDP growth rate and maintain a growth rate of 6.5%. Demand is stable in segments such as culture, health care, sports, hotels, and transportation. The total demand for building decoration is expected to reach 54,000 yuan by 2020. In the future, the company will focus on reforms, improve management standards, and promote the growth of both marketing and engineering. The company will improve the organizational structure to improve the efficiency of the company's management and operation and project economic efficiency, shorten the engineering cycle and improve the turnover rate of accounts receivable, and at the same time continuously optimize the company's operating model to promote the comprehensive development of marketing work and ensure the scientific nature of major project management and operation by broadening business channels. Benefiting from the recovery of the industry and the continuous optimization of the company's internal management, the company's uncompleted orders/2016 revenue ratio increased from 102% in 2016 Q4 to 113% in 2017 Q1, and order reserves guarantee the company's subsequent growth. Education sector: Coordinate the layout of Hongtao's vocational education resources, and cash-rich extension integration is expected to accelerate: the company's educational assets include cross-examination, Xuelsen, Jin Yingjie, and China New Network, etc., which are arranged in immediate fields such as postgraduate studies, construction vocational examinations, medical and judicial education, and architectural design. Qianhai Hongtao Education, a wholly-owned subsidiary, is a platform focusing on the strategic operation and extension expansion of the company's education sector. It has effectively guided the online transformation and upgrading project of cross-examination education and Xuelson's development strategy in the field of major construction engineering. Currently, the company's convertible bond funds are in place, and the company has plenty of cash on its account. Qianhai Hongtao is expected to speed up the integration of extension under the strategic framework and promote the endogenous+epitaxial development of the company's education sector in an integrated manner. Profit forecasting and valuation: Considering that the company's decoration business has reached an inflection point, order abundance has increased, and the gradual absorption of the impact of education sector policies is expected to usher in a recovery and growth in performance. The company has plenty of cash on its accounts. It is expected that the company will continue to promote the layout of quality education assets in the future. The increase in shareholders' holdings further shows confidence in the company's development. We expect the company to return net profit of 229, 2.72, and 331 million yuan in 17-19, and diluted EPS to be 0.19, 0.23, and 0.28 yuan, corresponding to the current stock price of 34, 29, and 24 times PE, maintaining a “highly recommended” rating. Risk warning: The building decoration industry market is sluggish, and the integration of education mergers and acquisitions falls short of expectations.