Key investment points: The “supercycle” ushered in profit elasticity and reaffirmed the “increase in holdings.” Maintain Hainan Airlines' 2016-2017 EPS forecast of 0.33/0.43 yuan, with a growth rate of 33%/30%. Currently 10 times PE. Guojun's shipping team maintains its judgment that the Chinese aviation market will experience a “supercycle” in the next three years. It is expected that the peak aviation boom in the third quarter will completely exceed market expectations. However, HNA has the highest passenger occupancy rate among the four major airlines, and is expected to be the first to usher in high profit flexibility in the aviation supercycle. The company's current stock price is 3.41 yuan, which is nearly 5% inverted from the fixed price increase of 3.58 yuan. According to a fixed increase and dilution, the 2016 EPS of 0.24 yuan was given 17 times PE, and the target price was lowered to 4.07 yuan to maintain the “increased holdings” rating. Penetrating the value of time, a clever strategic card. Hainan Airlines started as a regional airline and grew into a major national airline using its market-based mechanism. Currently, Beijing has become the largest base for HNA. Over the past 15 years, HNA Group has actively negotiated with local governments and established a number of regional airlines in joint ventures, which not only met the needs of local governments to develop aviation, but also achieved rapid implementation of itself in key markets, providing a definitive growth space for future development. Operations are becoming more stable, and financial risks are reduced. Hainan Airlines' high-leverage expansion strategy once made the market worry about its financial risks. However, in recent years, the company's balance ratio has been steadily falling below 70%. Meanwhile, the operating cash flow of Hainan Airlines has improved markedly since 2015. Based on our judgment of the “supercycle,” we believe that the company's financial risk has been reduced to a manageable range. If the fixed increase can be completed, it will have the ability to expand asset mergers and acquisitions that exceed market expectations. Risk analysis. Aviation demand fluctuation risk, oil price and exchange rate risk, aviation safety risk. In July 2015, the company promised to inject shares into the three subsidiaries of the Group within 24 months. Considering that the company's past commitments have been extended, there is uncertainty about the future progress of asset consolidation.