Investment recommendations We downgraded China's high-speed transmission rating from recommendation to neutral because the stock price reached our previous target price of HK$7.00, and we believe there is limited room for future profit growth and increased uncertainty about related growth. Reason why the results for the first half of 2016 slightly exceeded expectations. Revenue was 4,532 billion yuan, down 4.6% year on year, and net profit was 576 million yuan, up 9.9% year on year, corresponding to 0.352 yuan per share. Earnings for the first half of 2016 accounted for 53% of our previous full-year forecast (10%/47% of actual value in 2014/15). Strong wind turbine gearbox exports offset weak domestic demand. Despite the overall decline in China's wind power equipment industry (new installations fell 16% year over year, new investment fell 38% year over year), the company's wind power equipment revenue in the first half of 2016 still increased 3.2% year over year, mainly because strong exports (up 69% year over year) offset weak domestic demand (down 19% year over year). Considering the breakthrough supply to GE in European countries and the further expansion of the US market, we increased the 2016/17 wind power equipment shipment forecast 6%/4% to 16.5/17.7 GW. However, the sharp increase in exports is mainly reflected by the market (stock price rose 11% on August 22). We believe that there is limited room for future profit growth and increased uncertainty, mainly because: 1) the company already accounts for more than 50% of GE's wind power equipment demand, and there is limited room for further significant future growth; 2) GE's expansion in the EU may be threatened by Siemens, especially the latter's acquisition of Gamesa to expand the fan business; 3) Supply to other foreign manufacturers requires a long certification period; 4) from Goldwind Technology (using direct drive technology, no gearbox required) Direct competition, while Goldwind's market share in China is gradually expanding. Profit Forecast and Valuation We raised our 2016/17 earnings per share forecast of 7%/4% to $0.71/0.74 to $0.71/0.74 to reflect strong wind turbine gearbox exports. The target price was increased by 7% to HK$7.50, based on 9x 2016e PER, but due to limited room for growth, the rating was lowered from recommendation to neutral. Gross risk margin fell short of expectations; wind turbine gearbox shipments fell more than expected.