Report Highlights Incident Description False continues to follow up on the report. Incident comment: There is limited room for profit for steel wire ropes, and the traditional main business is gradually being divested: the company is the world's largest production base for special medium and fine steel wire ropes, but in recent years, affected by the downturn in downstream bridges, construction hardware, etc., the company's steel wire rope revenue has limited room to rise, and overall performance has remained marginally profitable. It can be described as a weakness. ROE has fallen to less than 1% since 2013. The company gradually divested its traditional assets under the slump in the market. Since transferring Bekaert's shares last year, it has also recently divested some loss-making subsidiaries. Compared with the company's current net market ratio of 3.85, the three subsidiaries estimate PB at only 1.12, indicating the firm determination of the company to divest traditional assets. Cash acquisition of Moshan Factoring, transformation of the financing service platform: Currently, domestic commercial factoring space is vast: 1) Accounts receivable continue to rise due to the downturn in the real economy, and the potential financing demand of factoring counterparts is large. According to data from the National Bureau of Statistics, at the end of 2015, the accounts receivable stock of domestic enterprises reached 26 trillion yuan; 2) The economic growth rate slowed down, traditional credit contraction, and factoring replaced factoring from the supply side. Currently, the operating pressure on manufacturing and heavy industry enterprises has doubled and cash flow has deteriorated, and commercial banks' non-performing loan balances and non-performing loan ratios have continued to rise, causing banks and other traditional financial institutions to gradually shrink credit business based on interest spreads, while commercial factoring based on accounts receivable can be replaced from the supply side. Moshan Factoring is the first asset securitization project enterprise in China to use factoring financing claims as an asset. The company plans to acquire it with 1.2 billion yuan in cash, which is expected to achieve a strategic transformation from a traditional metal products company to a financial service provider. The introduction of strategic shareholders is beneficial to the development of various types of financing business: resources and capital are the core competitiveness of the financing business. Take factoring business as an example. On the one hand, resource advantage with a wide range of business reach guarantees the volume and quality of factoring business; on the other hand, capital advantage can ease the extent to which factoring scale is constrained by regulatory leverage, and break through the bottleneck of excessive reliance on financing channels in the profit model. Jiangyin Yaobo, a subsidiary of the Zhongzhi Group, recently increased its shareholding ratio to Phare's victory. The current shareholding ratio is as high as 10%, indicating that there is strong expectation that the China Plant system will enter Phare to win. The entry of Zhongzhi Group, which has diversified businesses, will surely expand the scope of development of corporate financing business. Performance pledge+divestment of loss-making assets is bright and cheerful: As far as the acquisition of Moshan Factoring is concerned, the company and Hongsheng Group signed a “Performance Compensation Agreement”. Hongsheng Group promised Mosan Factoring to achieve non-performance of 120 million, 160 million and 185 million yuan in 2016, 2017 and 2018, while the company's non-performance in 2015 was only -26 million yuan; in addition, divestment of losing assets from steel wire rope will recover capital of 459 million yuan and achieve investment income of 47 million yuan. Combined with other profitable financing businesses in the future, the company's operating performance Significant improvements and continued growth are expected. Considering the impact of equity transfers and performance commitments on the increase in the company's performance, the company's 2016 and 2017 EPS are expected to be 0.38 yuan and 0.47 yuan, maintaining the “buy” rating.