The incident company announced on the evening of March 7 that it decided to stop planning major asset restructuring matters and resume trading on March 8. Recently, the company released the 2016 performance report, achieving operating income of 213 million yuan, an increase of 14% over the previous year, and net profit attributable to listed companies of 49.51 million yuan, an increase of 17% over the previous year, which is basically in line with expectations. Commenting on changes in the domestic securities market environment, the company decided to terminate the acquisition. The target of Huaming Smart's acquisition is a smart city solution provider. It originally intended to acquire 51% of its shares by issuing shares and paying cash and supporting financing. Due to recent major changes in the domestic securities market environment, policies, etc., the two parties were unable to agree on core terms such as transaction cash payment ratio and payment process arrangements, so the company decided to terminate this major asset restructuring matter. The epitaxial development strategy remains unchanged, and it is expected that the layout will continue to revolve around intelligent transportation in the future. At the same time, the company announced that the termination of this acquisition will not affect its strategy of seeking epitaxial development. It will continue to follow up on the progress of the target assets mentioned above, and will take the opportunity to initiate related matters after the transaction conditions are ripe. The company has previously acquired 7% of Albus Network Technology's shares to enhance the company's data operation and maintenance capabilities; it has also signed agreements to cooperate with the Yuxi Municipal Government and others to build smart cities and other projects. It is expected that the company will continue to lay out the fields of intelligent transportation and smart cities in the future. It is a core supplier of urban rail inspection and ticketing system equipment, and its performance is expected to maintain high growth. The company has mastered the core modules of the subway ticket inspection and sales system (AFC) equipment other than banknote recognition, and the product maintains an overall high gross profit (40% +). It is estimated that in the next five years, investment in urban rail transit will remain at 300 to 350 billion yuan per year, and the cumulative investment amount is expected to exceed 2 trillion yuan, corresponding to the demand for AFC terminal equipment at about 12 billion yuan. According to the performance report disclosed by the company, net profit is expected to be 49.51 million yuan in 2016, an increase of 17% over the previous year. The sharp increase in the company's investment in products and R&D during the reporting period may have a certain impact on net profit growth, and the performance growth rate is basically in line with expectations. Expanding into the field of downstream integration, the streetcar market will become a new growth point. The company is expanding the downstream system integration field vertically. It signed a contract for the Songjiang tram project last year with a total price of 71 million yuan. It will use this as a starting point to accumulate experience and gradually enter the field of streetcar AFC equipment and system integration. Streetcars have become the choice of many cities as a green travel tool. The total mileage of streetcar lines planned nationwide to be built in 2020 will reach 2,500 kilometers, and the company is expected to seize the first-mover advantage and benefit from the peak of streetcar construction. Profit forecast We forecast that the company's main business revenue for 2016 to 2018 was 214/318/41 million yuan, respectively, up 14.4%/48.6%/28.9% year on year; net profit to mother was 50/80/105 million yuan, up 19%/59%/31% year on year, respectively; EPS was 0.37/0.58/0.76 yuan, respectively, corresponding PE 93/59/45 times, respectively. Investment proposals We believe that the termination of this restructuring will not change the company's expectations around the continuous layout of the intelligent transportation industry chain; as a leader in rail transit AFC equipment segmentation, the company has gradually established product and customer advantages, and is expected to fully benefit from the peak of urban rail construction and opening in the next five years, and the company's performance growth is very certain. We maintain the company's “buy” rating, with a target price of 48-52 yuan for the next 6-12 months. Risk indicates that rail transit construction investment falls short of expectations, and there is a risk of future extension of mergers and acquisitions.