Key investment points The knitting machinery business rebounded steadily. In the first half of 2016, the company's computer knitting machine business and shoe lining machine business increased by 35% and 140%, respectively; among them, domestic revenue increased by 42% and overseas revenue by 32%. The growth in the domestic market is mainly due to demand for the upgrading of computer knitting machines and high growth in shoe lining machine products. Currently, the domestic market has 600,000 units, and some worn and aging equipment needs natural renewal; overseas markets such as Bangladesh are currently in the replacement stage for hand-cranked horizontal machines, and it is expected that they will continue to grow at a rate of more than 30%. The Internet layout is beginning to take shape. In the first half of 2016, the company adopted a cash acquisition method to acquire 100% of the shares of Duoyile Network and YouTou Technology at a consideration price of 1 billion yuan. We expect that Duoyle Network and YouTou Technology will be included in the company's consolidated financial statements around August 2016; without considering further extended development, we expect that the company's business from the Internet sector from 2016 to 2018 will contribute to net profit of 0.3 million yuan, 105 million yuan, and 158 million yuan respectively. Profit forecast and investment suggestions: Assuming that the company's acquisition of Duoyle Network and YouTou Technology successfully merged in August of this year, we expect the company's EPS from 2016 to 2018 to be 0.24 yuan, 0.36 yuan, and 0.53 yuan, respectively. Currently, the company's balance ratio is less than 10%. We expect that the company will continue to seek suitable investment targets, especially to increase investment in the Internet business, and in the future, achieve simultaneous progress in various sectors such as knitting machinery, the Internet, and robotics through business divisions. Maintain an “Overweight” rating. Risk warning: New product promotion results fall short of expectations; the macroeconomic environment deteriorates.