Key investment events: The company recently released its semi-annual report. In the first half of the year, the company achieved revenue of 464 million yuan, an increase of 30.91% over the previous year; net profit attributable to shareholders of listed companies was 71.8 million yuan, a sharp increase of 129.24% over the previous year. On the 3rd, the company announced that its subsidiaries had signed major contracts totaling $30.5 million. The comments on this are as follows: Comment: The high increase in the performance of the interim report is mainly due to the merger of Xiamen Po-Ting. In the first half of the year, the company achieved revenue of 464 million yuan, an increase of 30.91% over the previous year; net profit attributable to shareholders of listed companies was 71.8 million yuan, a sharp increase of 129.24% over the previous year. The sharp increase in profit was mainly due to the merger of Xiamen's support. On February 29, 80% of Xiamen Poting, an additional merger and acquisition, completed the transfer of 80% of shares. Thus, Xiamen Poting became a wholly-owned subsidiary of 3D Silk. In the first half of the year, Xiamen Poting contributed 249.4577 million yuan in revenue, accounting for 53.80% of the reporting period's operating income; it contributed 49.5564 million yuan in net profit, accounting for 69.02%. Xiamen Poting is mainly engaged in bulk materials transportation and storage, and the revenue structure is mainly based on overseas businesses such as Vietnam and the Philippines. Performance commitment: 2016-2017 withholding non-net profit of $0.97/131 million. Revenue side: Xiamen's Po-ting-related businesses contributed to the increase in revenue, and the traditional main business declined. In the first half of the year, the company's filter business achieved revenue of 135 million yuan, a year-on-year decrease of 33.82%. The gross profit margin was 29.06%, down 2.31% year on year, mainly due to intense low-end and disorderly competition in the current filter industry; the environmental engineering business achieved revenue of 7.12 million yuan, a sharp decline of 95.18% over the previous year, and a gross profit ratio of 11.09%, which remained unchanged year on year, mainly because it did not undertake environmental engineering projects in the first half of 2016; due to external acquisitions and new environmental protection equipment business, the business achieved revenue of 66 million yuan, gross profit margin of 48.75% in the first half of the year; the new bulk material transportation and storage system business achieved revenue of 240 million yuan, gross profit margin of 30.35%. The increase in corporate expenses is mainly due to mergers and acquisitions of companies. In the first half of the year, the company incurred financial expenses of 4.55 million yuan, an increase of 18.07% over the previous year, accounting for a relatively small amount; it incurred administrative expenses of 46.18 million yuan, an increase of 94.54% over the previous year, mainly due to the merger of Xiamen Poting and Loca Environmental Protection; and sales expenses of 26.83 million yuan, an increase of 38.79%, mainly due to the merger of Xiamen Poting. Large orders have been placed continuously, and there are plenty of orders in hand. In July, Xiamen Poting signed a $1.03 million Taishuo Heavy Industries order. On September 9, Xiamen Poting once again signed two business contracts with US-related companies of Formosa Plastics Group, with a total contract value of US$30.5 million (an equipment sales contract worth US$20 million, and an installation and construction contract with an amount of US$10.5 million). Xiamen Poting currently has more than 1 billion orders, and its performance may exceed expectations! The establishment of a 500 million yuan M&A fund accelerates outreach to achieve full coverage of the front and back ends of clean energy. 1) Capital increase, merger and acquisition of Zhongxin Biomass: On October 14, 2015, the company announced that it intends to increase the capital of Zhongxin Biomass by 24 million yuan. After the transaction is completed, it will hold 60% of Zhongxin's shares. 2) Capital increases, mergers and acquisitions, a pioneer with low cost and zero emissions of desulfurization wastewater, Shengfa Environmental Protection: On December 4, 2015, the company announced that it intends to increase capital to Shengfa Environmental Protection by 10 million yuan. After the transaction is completed, it will hold 5% of Shengfa Environmental Protection's shares. Shengfa Environmental Protection's solution to “zero emissions” of desulfurization wastewater using waste heat from power plant boilers at low cost has huge market space. 3) Full coverage of the front end and back ends. This is the only one: coal emissions are officially upgraded, and clean energy is imperative. Through Xiamen Poting, the company can make its own leading front-end bulk material transportation and storage systems; through Loca Environmental Protection and its headquarters, the company can provide high-quality back-end flue gas treatment services. The company invested 100 million yuan to participate in the establishment of the 500 million yuan Huaxin-3D Silk Environmental M&A Fund to accelerate expansion. Investment advice: Maintain an increase in holdings rating. Currently, the company's additional funding to raise funds has been approved by the Securities Regulatory Commission. The corresponding share capital for preparing for the exam is 378 million shares, and the market value for the exam preparation is 7.5 billion yuan. We predict that the net profit of 3D Silk for the year 16 to 17 will reach 17/220 million yuan, and the corresponding exam preparation valuations will be 44 times and 34 times, respectively. Xiamen Poting has more than 1 billion orders in hand, and its performance may have exceeded expectations. The establishment of a 500 million yuan M&A fund accelerates outreach. Currently, the company's stock price is 19.92 yuan/share, close to the ancillary financing price of 17.71 yuan/share, and lower than the increase in shareholders' holdings of 19.21 yuan/share. The current price security is strong. Based on this, maintain an increase in holdings rating. Risk Warning: Dust Removal and Filter Business Continues to Decline