1. Incident Company released its 2016 annual report. 2. Our analysis and judgment 1) Affected by changes in the scope of statement consolidation, the performance increased by more than 18 times. The company completed the acquisition of Guosheng Securities, and the scope of financial statement consolidation was changed, resulting in a sharp increase in the company's performance by more than 18 times. In 2016, the company achieved a total operating income of 1,642 billion yuan, an increase of 56.44% over the previous year; net profit of 498 million yuan, an increase of 1803.97% over the previous year; and net assets of the mother's net assets of 11.564 billion yuan, an increase of 1396.8% over the beginning of the year. The diluted EPS was 0.7915 yuan, an increase of 505.12% over the previous year; the ROE was 7.07%, a decrease of 3.95 percentage points over the previous year. 2) Implement a two-tier internal and external restructuring to create an Internet financial control platform. 2016 is the first year for the company to implement strategic transformation. During the reporting period, the company implemented a two-tier external and internal restructuring, completed the acquisition of 100% of Guosheng Securities's shares externally, and internally restructured the parent company into a holding management platform. After Guosheng Securities was included in the company's consolidated statements, the company's business structure, asset size, capital strength, profit level, and influence all underwent major changes. The company changed its main business from wire and cable manufacturing to securities business. During the reporting period, the company's operating income from the securities business reached 822 million yuan, accounting for 50.06%; net profit from the securities business was 458 million yuan, accounting for 92.05%. While the company carried out an external restructuring, it also began to adjust the internal organizational management structure. The company's original cable business fell to subsidiaries, and the company formed the three business modules of “securities+investment+manufacturing”. The parent company was upgraded to a holding management platform to manage various business segments through equity management. The change in management model helps to effectively integrate high-quality assets using listed platforms, gradually enter relevant financial industries with good growth and strong profitability, and ultimately build the company into an Internet financial control platform for concentration, innovation and development. 3) The performance of Guosheng Securities fell short of promises. The company invested 6.396 billion yuan in Guosheng Securities to help development during the reporting period. During the reporting period, Guosheng Securities achieved operating income of 1,252 million yuan, net profit of 613 million yuan, net profit of 613 million yuan, and net profit of 608 million yuan after deducting non-return to the mother. According to the “Performance Commitment Supplementary Agreement” signed in 2016, Zhongjiang Trust promised that Guosheng Securities's net profit in 2016 should not be less than 740 million yuan, otherwise it will have to fulfill its compensation obligations. The completion rate of Guosheng Securities's 2016 performance promise was 82.19%. Zhongjiang Trust is required to accumulate compensation for differences in subsequent performance commitment years. The company makes every effort to promote the development of securities business. During the reporting period, the company injected 6.396 billion yuan into Guosheng Securities through targeted issuance of additional shares and issuance of bonds to supplement working capital to ease the bottleneck of Guosheng Securities's net capital constraints, promote business scale expansion, and enhance comprehensive financial service capabilities. While ensuring the steady development of Guosheng Securities's original business, the company adjusted and optimized the securities business layout, actively cultivated new profit growth points, and focused on developing asset management, fixed income, capital intermediation and investment businesses. With the gradual improvement of the organizational structure, personnel introduction, and team building, new capital benefits have been added, and we are optimistic about the development prospects of Guosheng Securities. 4) Apply for insurance and Internet microfinance licenses, expand the financial services sector layout During the reporting period, the company expanded its layout in the fields of insurance, consumer finance and Internet microfinance, and continued to promote the strategic development of Internet financial control platforms. It is planned to invest 100 million yuan to participate in the establishment of Junan Life Insurance Co., Ltd. to obtain an insurance license and enter the insurance industry. The establishment is awaiting approval from the Insurance Regulatory Commission. Huasheng Qianhai Investment, a subsidiary of the company, transferred 5% of the shares of Beijing Happy Times Technology Development Co., Ltd. for 375 million yuan to enter the consumer finance sector. The company and other investors jointly initiated the establishment of Guangzhou Rennuo Internet Microfinance Co., Ltd. The establishment has passed the admission review by the Guangzhou Financial Services Bureau and is being actively prepared. 3. The investment proposal is to adopt a two-tier restructuring of “internal+external”. The company acquired 100% of Guosheng Securities's shares, lowered the original manufacturing related assets to the level of subsidiaries, and formed the three business modules of “securities+investment+manufacturing”. Build the parent company into a holding management platform and lay the foundation for subsequent intensive work to build an Internet financial control platform. Actively deploy the fields of insurance, consumer finance, and Internet microfinance, and expand the financial service system. The majority shareholders have significant resource advantages and are optimistic about the company's long-term development. Combining the company's fundamentals and stock price elasticity, we gave a “careful recommendation” rating and predicted 2017/2018 EPS of 0.91/1.09 yuan. 4. Risk suggests that market fluctuations have a large impact on securities business, and the construction of an Internet financial control platform falls short of expectations.