1. Overview of the incident Recently, we conducted research on Century Dingli and exchanged views with relevant company personnel on the company's business situation and future development strategy. 2. Analysis and judgment are driven by both “communications+vocational education”. The traditional main business of the company is communication services. It began entering the field of vocational education in 2014, successively acquired Zhixiang Information, and founded Dingli University. The business model is mainly asset-light operation. In 2016, the company achieved operating income of 736 million yuan, an increase of 5.7% year on year; net profit to mother was 120 million yuan, an increase of 4.81% year on year. In the first quarter of 2017, revenue reached 168 million yuan, a year-on-year decrease of 6.66%; net profit to mother was 31.3942 million yuan, an increase of 30.54% year-on-year, mainly due to increased demand from telecom system vendors for wireless network testing instruments, lower sales expenses, and a year-on-year increase in government subsidies. Overall, the company's main business growth rate has remained steady, and the business situation is relatively good. Currently, the vocational education business accounts for about 1/3 of the revenue. In the future, as Dingli University expands nationwide, its share of performance will gradually increase. The vocational education market space is vast, and Dingli University has great potential for development. Since the State Council issued the “Decision on Accelerating the Development of Modern Vocational Education” in 2014, a series of national education policies and supporting measures have put China's vocational education on the cusp, and it is expected that the market size will continue to grow rapidly. The company entered the IT vocational education field in 2014, pioneered Dingli College, and the vocational education business developed steadily. In 2016, the vocational education sector achieved revenue of 250 million yuan, an increase of 7.7% over the previous year, and net profit of 70.82 million yuan, which has become an important source of profit for the company. In 2017, Dingli University will continue to explore the national market, achieve rapid expansion, and there is plenty of room for profit improvement. Industry and education are deeply integrated. School-enterprise comprehensive cooperation Century Dingli is a leading domestic telecommunication network optimization service provider. The company innovatively introduced the integration of industry and education into the field of vocational education, pioneered Dingli University, built a training base with local universities, and introduced high-quality international education and industrial resources, which has a first-mover advantage. By the end of 2016, a total of 10 Dingli colleges had been established. In 2017, it is planned to establish 15-20 Dingli colleges. At the same time, the enrollment scale and per capita fees will be increased, which will effectively raise the profit level of the vocational education business. Investment in innovative research and development has increased. Keeping up with the pulse of the technological era, the company is currently the largest provider of measurement and testing instruments in the wireless communication field and one of the most mature wireless network end-to-end solution providers in China. It has a complete product line, and its independent development capabilities are at the forefront of the industry. The products are widely used in China Mobile, China Unicom, and China Telecom, and have a high market share. Over the years, the company has continued to increase R&D investment. In 2016, the company invested 86.7768 million yuan in R&D, an increase of 25.06% over the previous year, and R&D expenses accounted for 11.80% of the revenue. We believe that the company's continued investment in R&D will directly benefit the improvement of technology and product standards, further consolidate its position in the industry, and enhance its core competitiveness and brand awareness. 3. Profit Forecast and Investment Proposals In the context of the continuous increase in demand for vocational education, the vocational education sector will become a solid source of revenue for the company, driving the “communication+education” dual main business with the integration of industry and education, especially in the field of vocational education. The effective operation of the company lays a good foundation for future long-term development. We are optimistic about the company's asset-light business model and core competitiveness. The company is expected to achieve basic earnings per share of 0.30, 0.39, and 0.47 yuan/share in 2017, 18, and 19, corresponding to PE in 2017, 18, and 19, respectively, 34X, 26X, and 22X. A “Highly Recommended” rating was given for the first time. 4. Risk warning: 1. Market competition risks have intensified; 2. Dingli University's expansion falls short of expectations; 3. The fixed increase process falls short of expectations.