1. Overview of the incident On May 25, 2017, the company issued an announcement: Wang Weihang, the largest shareholder, or his co-actors intend to increase their holdings of the company by no less than 300 million yuan and no more than 600 million yuan. Up to now, Wang Weihang holds 91.91 million shares of the company, accounting for 8.32% of the company's total share capital. 2. Analyze and judge the increase in majority shareholders' holdings, showing confidence that the majority shareholders expect to increase their holdings by about 3%-6% of the total market value. The implementation period is within the next 12 months from May 25, 2017. The capital comes from the majority shareholders' own capital and self-raised capital. We believe that on the one hand, increasing holdings will help strengthen the majority shareholders' ability to control the company. On the other hand, it is also a sign of long-term optimism about the company's development, demonstrating confidence in the company's future development. The acquisition of GD was successful, enabling Open Source Cloud Company to complete the Grid Dynamics (GD) merger and acquisition on April 7 this year, and spent US$118 million to obtain 100% control. GD is an IT service company located in the US. It specializes in providing innovative and key cloud solutions for retail, financial and technology companies, and currently serves the largest department stores and top IT companies in the US (from: GD's official website). GD is a high-quality target with high growth and high profit margins. In 2015, revenue was 39.73 million US dollars, a growth rate of 30.9%, and profit before interest and tax was 8.82 million US dollars, a growth rate of 335%. GD promises to complete a profit of US$15 million within 12 months of delivery and US$20 million of profit before interest and tax within 12-24 months (from: Company Announcement). We believe that the acquisition of GD not only boosted the company's performance, but also gained huge strategic advantages in technology sharing and market sharing. Lay out the Internet of Things and participate in the growth of high-quality companies. Companies participate in M&A funds with no more than 590 million yuan of their own capital. The fund plans to acquire 82.7471% of Tailing Microelectronics's shares for $1.86 billion, and has signed an equity transfer agreement with Tailing on April 11, 2017 (Source: Company Announcement). Tailin Microelectronics was named one of the most popular emerging semiconductor companies in the world by the EE Times in 2016, and was once the only chip design company invested by Intel. Tailin has independently developed intellectual property rights for all modules in its SoC chips. Through an innovative system architecture, Tailing has greatly optimized the design of system-level chips and achieved highly integrated, high-performance, and low-cost solutions (from: Tailing Microelectronics official website). We believe that the company has successfully entered the IoT field through fund holding Tailing, which will help the company seize IoT market opportunities. Endogenous growth can be expected in 2017. In the last year, Huasheng's cloud-based solutions (especially hybrid heterogeneous clouds) were recognized by the market. Revenue from products such as servers and middleware had a major breakthrough. Hundreds of companies used Huasheng Tiancheng's small computers, databases and other products. We believe that the company invested heavily in autonomous and controllable products, the product maturation cycle was long, and the market pattern changed greatly, causing performance to fall short of expectations for a period of time. However, in the long run, the company's level of mastery of core technology is improving, medium- to long-term product performance will be even better, and future performance can be expected. 3. Profit forecast and investment recommendations We expect the company's operating income in 2017-2019 to be 6.3 billion, 8.07 billion, 10.34 billion, and net profit of 155 million, 263 million, and 342 million yuan, respectively. The corresponding EPS is 0.14, 0.24, and 0.31 million yuan, respectively. According to the company's current stock price, PE is 65.3X, 38.5X, and 29.6X, respectively. We believe that the company's reasonable valuation range in 2017 is 75-80 times, and the corresponding reasonable valuation is 10.5-11.2 yuan, and continues to give it a “highly recommended” rating. 4. Risk warning 1) The acquisition company falls short of expectations; 2) the acquisition company's customer concentration is high; 3) Major technical risks; 4) The growth sector falls short of expectations.