Investment Highlights This Tuesday, we conducted research on Dongxing Securities and exchanged views with company board leaders on the industry development environment, the impact of regulatory changes, company strategy and business operations. Benefiting from cooperation with major shareholders, the results have been relatively stable for 16 years. In 2016, we achieved a total operating income of 3,573 billion yuan, a year-on-year decrease of -33.30%, and realized net profit attributable to shareholders of listed companies of 1,353 billion yuan, a year-on-year decrease of -33.81%. Compared with the average decline of 45%-50% across the industry, the company's performance in 2016 was more stable. It mainly benefits from deep cooperation between investment banks, asset management businesses and major shareholders, enabling the company to ensure business development in a turbulent market environment. The results of the new capital are yet to come to fruition, and risk control is in place, and there is no need to worry about the future. The company issued targeted additional financing of 4.77 billion yuan in October '16, increasing the net asset level by 36.5%. However, judging from the company's results for the first quarter of '17, revenue was 721 million yuan, up 6.79% year on year, down -36.65% month on month; net profit to mother was 302 million yuan, up 8.46% year on year, up 18.17% month on month, and the new capital did not play its full role. The new capital was mainly used for investment in asset management, capital increases in subsidiaries, etc.: the Hong Kong subsidiary achieved profit in the second year of establishment, but the revenue contribution was still small; the asset management business was affected by some of the market environment, and the effects of the capital increase were not reflected in revenue. What is reassuring, however, is that the company conducts a self-inspection of each business and adjusts the structure according to policies, so the recent new regulatory policy will have less impact on the company's business, and the new capital will further ferment over time. Group collaboration has been further deepened, and model reforms have been revitalized. The synergy between the company and major shareholders continues to deepen, and many businesses such as investment banking, asset management, and investment have clearly benefited. In 2016, the scale of collaborative projects between the two sides exceeded 100 billion yuan, and total revenue increased 243.77% year on year. At the same time, Dongfang Asset, the majority shareholder, has completed the shareholding system reform, transformed into a simple management level, and set up a new department responsible for communication and coordination, making collaboration within the group more dynamic. The company has an important strategic position within the group and is expected to gain new growth points in the new model. Profit forecasting and valuation: As the only listed brokerage firm under the four major asset companies, the company has abundant resources, and the value of resources is still being explored and discovered. Risk control is strong, new capital continues to grow, group collaboration is revitalized, and development prospects cannot be ignored. Assuming that the average daily trading volume of the brokerage business in 17-19 was 500 billion, 521.5 billion, and 547.6 billion yuan, respectively, and the average daily balance of the two loans was 1 trillion yuan, 1.1 trillion yuan, and 1.1 trillion yuan, respectively. The EPS for 2017, 2018, and 2019 is expected to be 0.60 yuan, 0.67 yuan, and 0.72 yuan, respectively, maintaining its increase rating. Risk warning: The capital market risk explosion fell sharply, and the Group's business collaboration was not as good as expected.