Report summary: 2016 interim report: The company achieved operating income of 205.8644 million yuan, an increase of 11.73% over the same period last year; operating costs were 112.186 million yuan, an increase of 15.59% over the same period last year; and net profit attributable to shareholders of listed companies was 3,881.83 yuan, an increase of 25.14% over the same period last year. The traditional main business is developing steadily, and gross margin continues to maintain a high level. In the company's product revenue structure, equipment monitoring, security, and power supply equipment products ranked in the top three in that order. Operating income increased by 0.61%, 15.66%, and 86.02%, respectively over the previous year; gross margin remained at a high level, with the three being 45.28%, 48.77%, and 43.57%, respectively. The growth of traditional main businesses is mainly due to the deepening of the construction of the national railway network and the increase in demand for line monitoring and security; in addition, the company's revenue from subway orders (mainly concentrated in the Zhengzhou subway) was confirmed, which also contributed part of the revenue during the reporting period. The big traffic WiFi strategy is progressing in an orderly manner, and the traffic monetization model based on advertising/O2O is worth looking forward to. By holding shares in Flying Union, Sever Technology, and Colorful Access, the company has taken over WiFi entrances in various traffic scenarios and urban stations. Furthermore, the company recently acquired advertising management rights for Shanghai Rail Transit Line 16 (at a cost of 26 million yuan, until the end of 2021) and began to seize the scene in the first-tier city rail network. In the future, on the basis of high-density coverage of WiFi hotspots, a mobile Internet platform based on a brilliant brand will be launched to monetize traffic by charging back-end content providers. Profit forecast: In 2016-2018, the company's operating income is expected to be 738 million yuan, 876 million yuan and 1,069 million yuan, respectively, up 30.40%, 18.62% and 22.06% year on year; net profit is 161 million yuan, 205 million yuan and 240 million yuan respectively; earnings per share are 0.36 yuan, 0.46 yuan and 0.54 yuan, corresponding P/E of 47 times, 37 times and 31 times, respectively. Maintain a “buy” rating. Risk warning: The potential replacement risk of 5G communication technology to WiFi.