The company's net profit from January to June 2016 fell 72.2% year on year, and EPS was 0.06 yuan. From January to June 2016, the company achieved operating income of 148 million yuan, a year-on-year decrease of 37.6%; realized net profit of 15.31 million yuan, a year-on-year decrease of 72.2%, and earnings per share of 0.06 yuan. In the second quarter, the company achieved operating income of 59.45 million yuan, a decrease of 50.5%, a decrease of 33.1%; in the single second quarter, the company achieved net profit of 4.53 million yuan, a decrease of 84.6%, a decrease of 57.9%, and earnings per share of 0.02 yuan. Product gross margin declined, and the cost ratio for the period declined. During the reporting period, the company's industrial protective enamel materials achieved operating income of 84.35 million yuan, a year-on-year decrease of 46.9%, and product gross margin of 17.2%, a year-on-year decrease of 24.3 percentage points, mainly because MGGH revenue confirmation fell short of expectations; internal façade enamel steel sheets achieved operating income of 62.87 million yuan, a year-on-year decrease of 10.5%, and a 50% year-on-year increase of 9.5 percentage points. The enamel board achieved revenue of 290,000 yuan, a decrease of 96% over the previous year, and the gross profit margin of the product was 39.1%, a decrease of 20.7 percentage points over the previous year. The enamel board business declined sharply, mainly due to production capacity bottlenecks, which reduced upfront orders, which dragged down sales. During the reporting period, the company's comprehensive gross profit margin was 31.4%, down 10.6 percentage points; the sales expense ratio and management expense ratio were 7.7% and 16.4%, up 4.0 and 6.5 percentage points, and the financial expense ratio was 0.06%, the same as the same period last year. The cost rate for the reporting period was 24.2%, an increase of 10.5 percentage points over the same period. The sharp increase in the fee rate for the period was due to the increase in expenses due to the company's acquisition of new subsidiaries and promotion of new products, and a decrease in revenue scale year over year. Profit forecasting and investment advice: The short-term bottom of performance is hovering, and the growth logic remains unchanged: the recent decline in performance is related to the revenue confirmation cycle. The execution cycle of MGGH's business is 3-6 months. Considering the gradual release of orders around the first quarter, it is expected that revenue will be realized in the second half of the year; the interior façade enameled steel plate business has a relatively long supply cycle and is determined by construction progress, so revenue recognition is slightly delayed. The growth logic has not changed: in the short term, demand for MGGH equipment is rising due to the acceleration of ultra-low thermal power emissions, and rail transit investment has stimulated an increase in sales of enamel steel sheets for internal facades. The launch of a new 500,000 square meter production line at the end of the third quarter will break the bottleneck in enamel board production capacity. Further, the company's long-term growth logic lies in the continuous expansion and expansion of the application fields of new enamel materials. Recently, the company has taken advantage of the durability of enamel materials to enter the field of sewage treatment, and the next step in business promotion in the field of thermal power chimneys and flues is also worth looking forward to. It is expected that downstream orders will continue to be released: since this year, the company has announced major orders (worth over 30 million yuan) of about 200 million yuan. Considering that Tianrun New Energy's order of about 100 million yuan has not been executed together, the unexecuted order size currently announced is about 300 million yuan. Recently, there has been a slight slowdown in the release of orders for MGGH, but considering that there are about 580 million kilowatts of units that need to complete ultra-low emission modifications nationwide by 2020, and the “Ten Rules of Atmosphere” to vigorously promote the application of ultra-low emission technology in the non-electric industry, the downstream market demand for the company's related products is strong; the company's enamel board products mainly target high-end property building facades, and early abandonment of orders due to capacity bottlenecks. As the new production line is put into operation in the third quarter, the release of orders is worth looking forward to. Employee shareholding is nearing its end, and the company's pessimistic expectations are gradually disappearing. The second half of the year has entered an inflection point in performance (the base for the same period last year was low), and performance is expected to continue to grow throughout the year. The company's net profit for 16-18 is estimated to be 106 million yuan, 156 million yuan, and 202 million yuan, corresponding to EPS in 16-18, 0.37 yuan, 0.54 yuan, and 0.70 yuan. Maintain the buying rating, with a target price of 26.6 yuan. Risk warning: The promotion of ultra-low thermal power emissions fell short of expectations; the revenue recognition cycle was extended.