Event: recently, the company announced that it will acquire 51% of the shares of Chengdu Southwest Jiaotong University Drive Technology Co., Ltd.

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It is proposed to acquire 51% stake in driving technology of Southwest Jiaotong University and actively layout the post-rail market. The company intends to subscribe for 3 million yuan of registered capital of Chengdu Southwest Jiaotong University Drive Technology Co., Ltd. with its own capital of 21.281 million yuan, accounting for 20% of its total share capital, and to accept 4.65 million yuan of registered capital transferred by the original shareholders with 32.9856 million yuan. After the completion of this transaction, brilliant Technology holds a total of 51% of Jiaotong University Drive. Jiaotong University Drive is a high-tech enterprise engaged in the research and development, production, sales and technical service of electrified railway modern technical equipment, subway maintenance equipment and mechanical-electrical-hydraulic integrated equipment. It is a domestic professional company producing live water flushing equipment for electrified railway (high-speed railway) catenary live water flushing equipment and subway tunnel water flushing equipment has high technical leadership and market share. This investment is the further expansion of brilliant science and technology in the field of rail transit, aiming at the urban rail transit and high-speed rail market, and in the field of large-scale operation and maintenance machinery and equipment, which is conducive to the further implementation of the company's strategy of "deepening the field of rail transit".

The strategic layout of the company's WiFi will be accelerated. At present, the company is waiting for approval, the plan is to Li Haiying, Yuan Yaqin two specific investors non-public offering of no more than 18169582 shares, the non-public offering of shares raised a total of no more than 270 million yuan, after deducting the issuance costs to be fully invested in the transportation WiFi R & D center construction projects. Vigorously expand the traffic WiFi business layout, we believe that the approval of the increase will mean that the company's WiFi strategic layout will be accelerated. The company will take advantage of the funds raised by this increase to continue to increase R & D investment, enhance the core competitiveness of product technology, and at the same time devote itself to expanding the growth of extension business, successively investing in Feitian Union, Saifu Technology, Qicai Tongda and other companies, actively developing large transportation WiFi and creating an integrated platform.

The company's main business benefits from the rapid development of the railway and rail transit industry. Railway investment is an important measure to stabilize the economy and promote growth. Statistics released by the China Railway Corporation a few days ago show that in the first three quarters of this year, national railway fixed asset investment reached 542.3 billion yuan, an increase of 10.3% over the same period last year. Of this total, national railway fixed asset investment reached 517.1 billion yuan, an increase of 12% over the same period last year. In addition, according to the 13th five-year Plan (draft for soliciting opinions) issued by the State Railway Administration, during the 13th five-year Plan period, China's fixed assets investment in railways will reach 3.5 trillion to 3.8 trillion yuan, and 30, 000 kilometers of new lines will be built. By 2020, the mileage of railways in operation across the country will reach 150000 km, including 30, 000 km of high-speed railways. With the development of economy, the scale of cities in China continues to expand, the urbanization rate increases significantly, and the economic strength is further enhanced. Subway has become an important part of public transport construction in large cities with rapid economic development, and the subway operation network is beginning to take shape. Traffic volume and network density are still far lower than those of major cities in the world. The mileage of subway operation in China is in a period of rapid growth, according to the construction experience of developed countries, this stage will continue to exist with the whole process of urbanization. We sorted out the 68 major urban rail transit projects proposed by the National Development and Reform Commission in 2015 for the next three years. Through the construction of these major projects, it is estimated that by 2020, the total mileage of urban rail transit in China will reach 7000 km. The company will benefit from the stable development of the industry, business will usher in a period of stable growth.

Obtain the first-level qualification of information system integration and service, and the competitiveness is greatly improved. Recently, the company has obtained the "Information system Integration and Service qualification Certificate" issued by China Electronic Information Industry Federation, which verifies that the company's information system integration and service qualification is the first level, which is the highest level of qualification. The company is an important supplier of railway communications, monitoring and security products. With the deepening of national railway network construction and the increasing demand for line monitoring and security, the company's market competitiveness has been significantly enhanced.

Profit forecast and rating: we expect the company's operating income from 2016 to 2018 to be 699 million yuan, 888 million yuan and 1.131 billion yuan respectively, and the net profit attributable to the shareholders of the parent company is 100 million yuan, 138 million yuan and 169 million yuan respectively. Based on the current equity (no additional issuance is considered for the time being), the corresponding EPS is 0.27,0.37 yuan and 0.45 yuan respectively. Due to the steady development of the traditional main business of brilliant science and technology, the "Big Traffic WiFi" strategy has been steadily advanced and continues to maintain the "overweight" rating.

Risk factors: 1, the risk of the decline of national railway investment; 2, the risk of product technological innovation; 3, the risk of the increase of accounts receivable; 4, the management risk brought by extension expansion.