The company's 2016 mid-year report shows that in the first half of the year, the company achieved revenue of 78.2616 million yuan, a year-on-year increase of 683.69%; net profit attributable to shareholders of listed companies was -21.7011 million yuan, a year-on-year decrease of 40.04%, and EPS was -0.09 yuan; the increase in revenue stemmed from the growth of the company's ocean exploration business and the inclusion of Huayang Communications and Great Wall Digital in the scope of the company's merger. The decrease in net profit was mainly due to the fact that portable anti-aircraft missile command system products achieved only a small amount of sales. With the advancement of defense informatization construction, the company's profit points are expected to explode. EPS is expected to be 0.19 yuan, 0.26 yuan, and 0.43 yuan respectively from 2016 to 2018, and the corresponding PE is 166x, 118x, and 72x respectively, covering the “recommended” rating for the first time. Key models are participating in military selection, and the company's performance has not yet been released: the company's net profit reduction in the first half of 2016 was mainly due to the small sales of the portable air defense missile command system series products. At the same time, the number of orders in hand was small and the execution cycle of military orders was long, so the performance declined sharply; in addition, the company's TH-S217 products and certain infrared remote warning and detection systems are participating in the domestic military's model selection competition. The competitive manufacturers are strong and the bidding pressure is high. With the advancement of defense informatization construction, the delivery of military products in the later stages, and the company's beginning to lay out business in the civilian sector, the company's performance is expected to resume growth in the second half of the year. The company's business has diversified and R&D investment has increased dramatically: Currently, the company has five major business fields: regional air defense, air traffic control equipment, intelligent security, marine exploration, and communication electronics, involving military and defense industries such as weapons and equipment, as well as civil aviation, navigation, coastal defense, and communication equipment. The company's business development shows a diversified trend. However, the company continues to increase R&D investment in products such as air defense intelligence and command systems, general aviation and drone management systems, photoelectric detection, ground reconnaissance and command systems, and target indicator radars. In 2014, 2015, and 2016, R&D investment accounted for 9.45%, 62.70%, and 35.79% of revenue to enhance R&D capabilities, enhance the company's strength, and lay a solid foundation for market expansion. Seizing the opportunity of civil-military integration, the application of military technology in the civilian field has achieved results: the company's core technology is dual-use technology, and its application in the civilian field is currently being promoted. The civilian goods business mainly includes the field of air traffic control equipment: a series of general aviation products have passed inspection; in the field of intelligent security: key security construction and anti-drone front-end detection system solutions have achieved phased results; in the field of marine exploration and communications electronics: the acquisition of Huayang Communications and the field of communication electronics has created new performance growth points for the company. Through the company's series of efforts, along with the expansion of the civilian market, it can be expected that the company will receive more orders in the future, and the market size will expand further. Investment advice: EPS is expected to be 0.19 yuan, 0.26 yuan, and 0.43 yuan respectively from 2016 to 2018, and the corresponding PE is 166x, 118x, and 72x respectively, covering the “recommended” rating for the first time. Risk warning: Key models cannot pass military selection, civilian product market development risks, and performance promises of acquisition targets cannot be met