1. Event Overview We researched MediaTek and exchanged views with company executives on the company's operating conditions and future development plans. 2. Analysis and judgment The main business has developed steadily, and its performance has improved rapidly. The company is a leading enterprise in the yarn-dyed fabric industry. It has a complete industrial chain integrating ginning, spinning, dyeing, weaving, finishing, knitting, home textiles, printing and dyeing, and garment making. At present, the company has an annual production capacity of 210,000 spindles of cotton yarn, 160 million meters of yarn-dyed cloth, 60 million meters of printed and dyed cloth, 11 million pieces of shirts, 6,000 tons of knitted yarn and knitted cloth, and 30 million meters of home textile fabrics. It is expected that production capacity will gradually be deployed to countries in Africa such as Ethiopia in the future. Benefiting from the consolidation of the original Lianfa Thermal Power (now Lianfa Environmental Renewable Energy), subsidiaries Lianfa Tianxiang and Lianfa Lingcai reduced losses, the depreciation of the RMB, and factors such as improved management standards and lower costs, the company achieved net profit of 236 million yuan in the first three quarters, an increase of 32.69% over the previous year, and a rapid increase in performance. Deepen the layout of the environmental protection sector and cultivate new profit growth points. The company actively lays out the environmental protection and new energy sector. Lianfa Thermal Power, a subsidiary, acquired the remaining 40% shares in 2015, and changed its name to Jiangsu Lianfa Environmental Renewable Energy Co., Ltd. in August 2016. Currently, revenue mainly comes from electricity, steam, sewage treatment, etc. In the future, it is expected that straw power generation, biomass power generation, sewage treatment, solid waste treatment, and hazardous waste treatment will be used as development directions to cultivate new profit growth points. Actively seek investment projects, incentivize funds to enhance business vitality, and the company has abundant cash flow. Shanghai Chongshan Investment Company was established in 2015. In the future, it is hoped that high-quality projects and business fields will be discovered through equity investment, mergers and acquisitions, and financial investment, etc., and the complementary development of industrial management and capital management will be promoted. In August 2016, the company launched a long-term fund incentive plan. The portion of the increase in net profit for the year within 100 million yuan is taken at 30% of the increase, and the portion exceeding 100 million yuan is taken at 20%. We believe that the introduction of incentive funds will help the company attract and stabilize middle and senior management personnel and core key talents, and continue to enhance business vitality. 3. Profit forecasting and investment suggest that the company's main business develop steadily, the environmental protection sector layout gradually deepens, and at the same time actively seek investment projects to cultivate new profit growth points. The 2016-2018 EPS is expected to be 1.13/1.27/1.45 yuan, and the corresponding PE is 16/14/13 times, which is upgraded to a “highly recommended” rating. 4. Risks suggest that new business expansion falls short of expectations, weak overseas demand, and exchange rate fluctuations.