Investment highlights: events. On June 16, the company announced the completion of the capital increase of Tianjin Fengshi Interactive Technology Co., Ltd. Capital was increased, and fronttime interaction was completed to complete the layout in the fields of speech and vision. In this capital increase, the company invested 18 million yuan and held 10% of the shares. Fengshi Interactive is a visual interaction technology provider in the field of artificial intelligence. It has developed gesture recognition products since 2011, and launched some products in the second half of 2015, mainly for VR/AR, smart cars, smart TVs, and smart homes to achieve the gesture interaction functions of such products. The basic core technology and technical team accumulated by Fengshi Interactive over many years will support the company in launching a series of visual interaction products. It is a leading domestic technology gesture interaction manufacturer, and its technical level is highly recognized in the industry. This investment is another investment in visual interaction technology application projects after the company invested in the Turing robot voice interaction technology project in 2015. After the completion of this investment, the company has invested in two basic artificial intelligence technology application fields, vision and speech. Invest in Beijing Lightyear to strategically transform artificial intelligence. In order to promote the transformation and upgrading of corporate strategies and create new business growth points, the company invested 50 million yuan in 2015 to increase the cash capital of Beijing Guangnian Infinity Technology Co., Ltd. and obtained 14.44% of the shares (post-investment valuation of 346 million yuan). Beijing Lightyear is one of the leading domestic enterprises developing and applying robot operating systems. It has a first-mover advantage, a certain technical threshold, and strong technical advantages in semantic recognition and artificial intelligence. The cloud-based robot brain “Turing Robot” developed by the target company can provide intelligent human-computer interaction services, can access various products that require voice-human-computer interaction, such as physical robots, smart toys, VR (virtual reality), wearable devices, etc. in the form of a cloud, and provide integrated and low-threshold robot brain access services to third party access parties, adapting to various scenarios, and broad application prospects. On January 20, 2016, Aofei Animation announced that it signed a “capital increase agreement” with Beijing Lightyear, invested 50 million yuan, obtained 5% of shares, and had a post-investment valuation of 1 billion yuan. The funds raised are used to improve and enhance the company's explosion service capabilities and level of informatization. The company's fixed growth plan has been approved by the Securities Regulatory Commission. It will add integrated service capabilities for open pit mines of 30 million square meters per year and 22 million tons/year of underground mine blasting projects, 2 million m3/year of mine ecological restoration service capabilities, intelligent production line transformation, etc., which are conducive to further improving the company's ability to integrate blasting services, expand the company's business scale, and improve the company's management level and continuous operation capacity through the implementation of “intelligent manufacturing, management informatization, and safety digitalization”. Profit forecasts and investment advice. Considering that the anti-terrorism situation in the Xinjiang region is gradually stabilizing, the revenue of Tianhe in Xinjiang will gradually recover. The company's net profit attributable to the parent company in 2016-2018 is expected to be 0.89/0.97/109 million yuan, an increase of 149.28%/8.95%/12.74% over the previous year; the corresponding EPS is 0.11/0.12/0.14 yuan, respectively. As one of the largest commercial explosion enterprises with the most complete qualifications and the widest regional coverage in China, the company actively lays out new fields of artificial intelligence through participation in Beijing Guangnian and Fengshi Interaction. In 2016, the average PE value of companies involved in the commercial explosion industry was 32 times, and the average PE value of involving artificial intelligence companies was 145 times. Comprehensive consideration gave the company 100 times PE in 2016, with a corresponding target price of 11 yuan. For the first time, it was covered by a “increase in holdings” rating. Risk warning. The risk that the prosperity of traditional blasting businesses will continue to decline; the risk that the commercialization of visual interaction and voice recognition technology is progressing less than expected.