Key investment events: On the evening of January 19, 2017, the company released its 2016 performance forecast. Net profit for the full year of 2016 is expected to reach 70 million yuan to 80 million yuan, down 26.26% to 35.48% from the same period last year. The main reasons for the decline in the company's net profit are: 1) contract prices fell due to intense competition in the mobile communication technology service market, and the company's overall gross margin declined; 2) the company's self-built office buildings reached a pre-determined state of use at the end of 2015, and various office building costs and expenses increased a lot during the reporting period; 3) due to planning major asset restructuring matters, the company's payment of intermediary fees during this reporting period increased compared to the same period last year. The full-year results are generally in line with expectations, and we are waiting for the cloud computing business to turn things around. Due to the low technical barriers in the communication network service industry, it is difficult to form a differentiated competitive advantage. In addition, market competition has intensified in recent years, so the market already anticipates a decline in the company's performance this year. The estimated net profit of 70 million yuan to 80 million yuan for the whole year is slightly lower than our previous forecast of 82 million yuan, but it is generally in line with our expectations. As the company completed the acquisition of 51% of Internet Harbor's shares on December 30, 2016, Internet Harbor officially became a holding subsidiary of the company. The combined performance of the Interconnected Harbor Hybrid Cloud will significantly increase the company's profits, and the company will also re-enter the path of rapid development. Industry trends: The hybrid cloud market is expected to dominate in the future, and DCI networks may become the backbone of the next generation. The continuous explosive growth of data traffic in recent years has driven the rapid expansion of the IDC market, and the trend of shifting data traffic from traditional data centers to cloud data centers has forced traditional IDC service providers to upgrade to cloud service providers. Since hybrid clouds combine the comprehensive advantages of public and private clouds, hybrid clouds are expected to dominate the entire cloud computing market in the future. At the same time, the rapid growth of IDC exchange traffic makes it difficult for the backbone network to bear pressure. By building a DCI (Data Center Interconnection) network, diverting IDC exchange traffic is an effective way to solve this problem. The DCI network is expected to form the next generation backbone network along with the traditional backbone network, and the utilization efficiency of the overall network will be significantly improved. Connected harbor: “IDC+DCI+SDN” seizes the hybrid cloud market and builds a hybrid cloud ecosystem through horizontal integration. Based on a precise judgment on the development trend of the industry, Internet Port has expanded the scale of IDC while establishing DCI-SDN networks in northern Guangzhou. At the same time, Internet Port has also joined hands with Pinkaoyun to launch an industry-leading hybrid cloud system to help customers quickly build IT systems that meet their own rapid development and stable operation. Furthermore, the demand for informatization upgrades in traditional industries has brought an excellent opportunity for the Internet port to enter the vertical field. In the next two years, Internet Harbor will seek integrators that are deeply involved in industry segments as partners to jointly help traditional enterprises achieve their demands for informatization through a cooperative model, and build a hybrid cloud ecosystem covering multiple vertical segments based on existing platforms. Joining hands with AWS and Alibaba Cloud, the international layout has begun, and the development of the Internet port has entered the fast track. In December 2016, Internet Harbor was able to connect with high-quality public clouds such as AWS, the global public cloud leader, and Alibaba Cloud, the domestic public cloud oligarchy, greatly expanding its potential customer base. At the same time, Internet Harbor officially kicked off the international layout, opened a Hong Kong cloud node at the end of 2016, and obtained the Hong Kong IAS (Internet Access Service) license, laying a solid foundation for further international layout. In 2017, Internet Harbor will continue to focus on the hybrid cloud field, continue to explore vertical industry markets, and actively expand overseas to provide users with higher quality, more reliable, and more reliable hybrid cloud services. Profit forecast and investment recommendations: The target price for 6 months is 16.33 yuan, maintaining the “buy” rating. We expect the company's net profit for exam preparation from 2016 to 2018 to be 78 million yuan, 140 million yuan and 182 million yuan respectively, and the corresponding diluted EPS is 0.181 yuan, 0.327 yuan and 0.424 yuan respectively. Considering that the DCI-SDN network established by the company has scarce technical advantages, we gave the company a certain valuation premium. In 2017, 50xPE had a target market value of 7.0 billion yuan, corresponding to the target price of 16.33 yuan, maintaining the “buy” rating. Risk Alerts: 1) Competition in traditional businesses has further intensified; 2) Internet Harbor's profit falls short of expectations