We forecast the company's net profit attributable to the parent company in 2016-2018 to be 197 million, 261 million and 340 million yuan, respectively, and the corresponding EPS is 0.28 yuan, 0.37 yuan, and 0.48 yuan, respectively. The company is a leading enterprise in the industry that can also provide comprehensive solutions for customized industrial production intelligence and power distribution automation systems. As the company continues to expand the business scale of the industrial automation industry through external acquisitions and endogenous growth, it is optimistic about the company's development over the next two years and maintain a “recommended” rating. The main automation business is developing well, and the performance growth is in line with expectations. According to the 2016 semi-annual report, the company achieved operating income of 533.7108 million yuan, an increase of 32.97% over the same period last year; net profit attributable to shareholders of listed companies was 74.4998 million yuan, an increase of 20.97% over the same period last year. During the reporting period, the company continued to increase its market development efforts, and the main business development momentum was relatively good. The company's sales scale increased by a certain margin compared to the same period last year. The industrial automation business and power automation business were the main sources of contribution to the company's operating income and gross profit, and the share of industrial automation-related revenue is expected to increase in the future. The company has added logistics and warehousing automation system products, and its revenue is mainly from logistics automation transformation projects. The gross margin of such projects is relatively high, at 59.61%. Further increase investment in R&D and enhance the company's R&D and innovation capabilities. The company's total R&D expenditure for the first half of 2016 was 39.073 million yuan, an increase of 38.47% over the previous year. During the reporting period, the company continued to increase investment in R&D, increase new product development and optimization and upgrading of existing products, and maintain product technical advantages and core competitiveness. In terms of industrial automation, the company has focused on independent research and development of new energy power battery assembly robots, multi-functional automatic anti-torsion equipment, intelligent carrier projects, pneumatic levitation platform trolleys, intelligent inspection and detection equipment projects, and lightweight T-robots. In terms of power automation, the company has completed the optimization and development of products such as online monitoring terminals, cable fault indicators, and four-meter collection protocol converters. During the reporting period, the company focused on R&D coordination, talent reserve, and project promotion of power inspection robots, speeding up the development progress of electricity products for the South Grid and research and development of a full range of fault indicators, completing technical reserves for the integration of equipment once and twice, and actively participating in the formulation of standards. Acquire Guanzhi Automation and Huaxiao Precision to improve the intelligent manufacturing business system. Guanzhi Automation is a professional integrated solution provider for industrial intelligent flexible production lines. It ranks at the advanced level in the field of industrial robot system integration and application technology. It is a leading enterprise in the domestic automotive intelligent welding production line segment, and has won the title of Excellent Supplier from Shanghai Volkswagen. Huaxiao Precision is a professional supplier of complete equipment and comprehensive solutions for industrial intelligent logistics transportation robots. It is in a leading position in the industry in the field of automatic guided wheeled logistics transport robots. Its AGV production scale is at the forefront of the country, and it is an excellent equipment supplier for Dongfeng Nissan Passenger Vehicle Company. At present, both companies have become wholly-owned subsidiaries of the company. This acquisition promotes the further improvement of the intelligent manufacturing business system, promotes the company's intelligent industrial production and robot application business to achieve a complete industrial chain layout integrating “intelligent transfer robot arm (hand) - AGV (foot) - flexible production line (body)”, consolidates the company's market position in the field of intelligent industrial production and robot applications, enriches and improves the company's industrial chain in the Industry 4.0 region, and enhances the company's business scale and profit level. Risk warning: Demand in the downstream market is insufficient, and competition in the industry is intensifying.