The steel pipe business turned a loss into a profit, and the main operating performance increased dramatically. In the first half of 2016, the company achieved operating income of 414 million yuan, an increase of 4.77% over the same period last year, net profit of 5.6509 million yuan, an increase of 2188.49% over the previous year, and realized net profit of 4.9511 million yuan after deduction, 9137.30% over the same period last year. The company's performance increased dramatically due to the company's steel pipe business being able to turn a loss into a profit. Traditional textile printing and dyeing and steel pipe manufacturers, policies help the company's traditional business continue to improve. The company's main business is textile printing and dyeing and the processing and sales of seamless steel pipes. According to the company's 2016 interim report, the company's textile printing and dyeing business accounts for about 58.97% of revenue, and seamless steel pipes account for about 41.03%. The Shaoxing region where the company is located is a well-known textile center in the country. The total local printing and dyeing production capacity accounts for about 1/3 of the country. Relying on geographical and policy advantages, the company has a large textile business and advanced equipment. With the holding of the G20 meeting in Hangzhou in September 2016, environmental issues in and around Hangzhou will once again receive attention. The government's control over small printing and dyeing enterprises that do not meet emission standards will be gradually strengthened. Future orders will be concentrated on large printing and dyeing textile enterprises with high environmental standards. The company's traditional textile printing and dyeing business is expected to develop at a relatively rapid growth rate in the second half of 2016. The company's seamless steel pipe production business is under high pressure to remove production capacity under the new economic normal. The company's steel pipe business was able to turn a loss into a profit in the first half of this year. In the future, the company will continue to stick to its traditional main business and strive to become the “leftover” and “winner” of the industry in a competitive environment of “survival of the fittest” market. It plans to spend 1.2 billion yuan to acquire Taiyi Zhishang, diversifying the company's future development or entering the fast track. In January 2016, the company announced that it plans to spend 1.2 billion yuan to acquire 100% of the shares of the big data marketing company Taiyi Zhishang. Taiyi indicates that it is still a leading big data technology enterprise in China. The company can provide internet marketing and marketing data analysis and services to advertisers. Internet marketing services account for more than 90% of the company's total revenue. The company relies on its subsidiary Taiyi Media to carry out accurate product positioning, market evaluation, and effect prediction and optimization through leading big data technology. Currently, this business mainly profits through the two models of “getting interest spreads” and “media rebates.” In terms of marketing data analysis and services, the company currently mainly sells DMP software to help customers achieve effective management of internal enterprise data and promote data value exploration within the company. Taiyi indicates that the revenue growth rate in the past three years has been relatively fast (+145.61%), gross margin has been steadily increasing, and the big data marketing business has developed by leaps and bounds. After the acquisition is completed, the company will form a dual main business layout of “traditional industry+Internet”. According to Taiyi, the performance promises for 2016-2018 are 55 million yuan, 85 million yuan (or the total net profit achieved in 2016 and 2017) and 122 million yuan (or the total net profit for three years is not less than 262 million yuan), respectively. The new business format layout is expected to contribute stable and continuous profits to listed companies, and the company may enter a fast track of development in the future. The company's future outlook. (1) The company's traditional textile printing and dyeing business will be more concentrated in the context of the Hangzhou G20, and is expected to develop at a relatively rapid growth rate in the future. The steel pipe business turned a loss into a profit in the first half of the year, and the company will continue to work hard in the second half of the year to improve its main operating performance. (2) The 1.2 billion yuan proposed merger and acquisition of Taiyi Shang will enter Internet big data marketing, or open up new opportunities for the company's performance growth. Profit forecasting and valuation. It is estimated that the company's traditional business will achieve net profit of 4.01 million yuan and 60.62 million yuan respectively in 2017 and 2018, and the corresponding EPS is 0.17 yuan and 0.21 yuan respectively. If the 2017 merger of the Taiyi Index is still considered, the net profit for exam preparation in 2017 and 2018 was 126 million yuan and 182 million yuan respectively, and the fully diluted EPS corresponding to the latest share capital was 0.24 yuan and 0.34 yuan. Referring to the average valuation of companies in the traditional printing and dyeing and marketing and big data industry, and considering that the company's traditional printing and dyeing business welcomed favorable policies, the steel pipe business turned a loss into a profit, and the Taiyi index of the merger and acquisition target still had high growth. We gave the company 65 times dynamic PE in 2017, with a corresponding target price of 15.60 yuan, covering the company's purchase rating for the first time. Risk warning. Due to downside macroeconomic risks, the future growth rate of the company's new media business may be lower than expected.