The half-year performance was lower than expected: the company released a semi-annual report that the first-half revenue was 497 million yuan, up 5.01% from the same period last year; the net profit was 70.324 million yuan, down 18.75% from the same period last year; and 41.701 million yuan was deducted from the non-return net profit, a decrease of 46.83% from the same period last year. On a quarterly basis, 2016Q2's revenue was 253 million yuan, down 5.11% from the same period last year; the net profit was 36.2158 million yuan, down 19.85% from the same period last year; and 13.0662 million yuan was deducted from the non-return net profit.

Export revenue increased significantly: 1) in the first half of the year, the revenue of printing products was 197 million yuan, down 9.39% from the same period last year, and the gross profit margin was 36.94%, down 3.54% from the same period last year. In the first half of the year, the company made great efforts to develop cloud printing business in Beijing-Tianjin-Hebei region, and cloud printing revenue was 30.05 million yuan, an increase of 41.95% over the same period last year. After further opening up other markets in the future, cloud printing is expected to maintain rapid growth in the future. 2) the company's revenue from post-press equipment was 255 million yuan, an increase of 5.44% over the same period last year, and the change in product structure led to a 10.44% to 32.39% decrease in gross profit margin compared with the same period last year. The company has completed the trial production of the first gravure press and has orders; the company has set up a project to develop post-press equipment suitable for personalized packaging; and to establish strategic cooperation with large domestic printing and packaging enterprises to speed up the landing of the overall solution of "Smart Printing Factory". With the deepening of cooperation with Heidelberg, sales in overseas markets are growing rapidly, with export sales revenue of 40.14 million yuan, an increase of 41.6% over the same period last year. The increase in bank borrowing led to an increase in interest costs, which led to an increase in financial expenses by 138.74% to 6.2351 million yuan compared with the same period last year; the increase in R & D investment in German R & D centers increased by 40.84% to 43.8577 million yuan; accounts receivable increased by 23.10% to 581 million yuan; inventory increased by 29.62% to 395 million yuan

Fixed increase code intelligent printing equipment: the company announced on August 1 that it will raise an additional 1.49 billion yuan to invest in the intelligent printing equipment production line construction project and intelligent printing equipment research and development project. The construction project of intelligent printing equipment production line is planned to raise 1.158 billion yuan. The main products include the overall solution of intelligent printing factory, intelligent packaging production line, green intelligent gravure printing machine and so on. The company's post-press equipment has the first market share in the domestic market, and is exported to more than 40 countries and regions such as the United States, Germany and Japan, serving more than a thousand printing and packaging enterprises around the world. Through the implementation of this project, the company can extend from the field of post-press equipment to printing equipment, high-end parts, new materials of printing equipment, automatic logistics and the overall solution of smart factory. The intelligent market of domestic printing and packaging equipment is monopolized by foreign companies, and the company is expected to achieve import substitution after the project reaches production. The estimated annual sales income of this project is 2.053 billion yuan after delivery, with an average annual net profit of 278 million yuan. Will significantly thicken the company's performance. The R & D of intelligent printing equipment mainly includes an R & D center, a trial-production center and a demonstration center. The implementation of the project will promote the sales of new products and enhance the company's technical strength.

Investment suggestion: we expect the company's net profit from 2016 to 2018 to be 186 million yuan, 217 million yuan and 265 million yuan respectively, corresponding to EPS 0.55 yuan, 0.64 yuan and 0.78 yuan respectively, intelligent printing equipment has a bright prospect; the investment rating of Buy-A for the first time, the 6-month target price is 19.25 yuan.

Risk hint: the progress of the fixed increase project is not as expected; the macroeconomic decline is further.