Investment points: The company participates in investing in the establishment of industrial mergers and acquisitions funds. Dagang Co., Ltd. signed a “Framework Agreement” with China Energy Huayu and Zhen Hi-Tech to establish a merger and acquisition fund. The total size of the M&A fund is RMB 5 billion, of which the company subscribes for 100 million yuan as a subordinate level, Zhen Hi-Tech subscribes 100 million yuan as a subordinate level, and China Energy Huayu subscribes 10 million yuan as a subordinate level. The fund lasts for 5 years and can be extended for 2 years; use M&A funds to find high-quality targets. The establishment of an industrial merger and acquisition fund this time is another strategic layout for the company to use financial resources to achieve transformation and optimize the industrial structure. Through risk sharing with co-investors, the uncertainty of the company in the merger and acquisition process is reduced, and effective support is provided for the company's capital operations. Through the M&A fund platform, we make full use of China Energy Huayu's superior resources and professional investment and management experience to cultivate excellent targets for mergers, acquisitions and restructuring in emerging industries such as the company's integrated circuits, energy saving and environmental protection; the company is a model for state-owned enterprise reform and use of capital to achieve transformation, and its early acquisition of Ike enters the independent testing industry. Ecco Semiconductor is a leading manufacturer in the field of integrated circuit testing in China, and Ecco's testing business has a high level of gross margin. As large domestic manufacturers such as SMIC expand production one after another, international giants Intel and Samsung invest in China, and TSMC settles in Nanjing, the market space in the field of integrated circuit testing will grow rapidly! The merger and acquisition of Elko marks an official entry into the semiconductor testing industry, opening up a new layout and development space; independent third-party testing companies will usher in rapid growth. Compared with the traditional “packaging-test” one-stop model, independent third-party testing companies have economies of scale and learning curves, and at the same time have information security advantages. Professional independent third-party testing companies may become mainstream in the future; Aiko's 300-acre plant is close to TSMC, relying on geographical advantages to seize customer resources. The 300-acre new plant is adjacent to TSMC, and is participating in the industrial chain support of TSMC's Nanjing project. It is expected that subsequent independent testing of integrated circuits will have a huge impact on receiving orders; adding major customers and expanding production capacity in 2016 is expected to become the absolute leader in the industry. In 2016, Ecco Semiconductor signed cooperation agreements with Exxun, Redico, and Startech Jinpeng (Shanghai) Co., Ltd. The products of Spreadtron and Startech Jinpeng have already entered engineering testing, and mass production can be carried out after the engineering tests are completed. These newly expanded large-scale customers can guarantee the continued growth in revenue from Echo's semiconductor testing business. At the same time, the company's production capacity is leading in mainland China at this stage. From 2016 to 2019, it will also add 20, 22, 20, and 20 sets of test equipment year by year, providing strong support for business growth; the military industry has achieved a breakthrough, and laser products are expected to become a new growth point. After China Science and Technology Port, a subsidiary of the company, obtained the qualification of a third-level confidential qualification unit in March 2015, China University of Science and Technology has obtained the weapons and equipment quality management system certification. 2016 is expected to become a new profit growth point for the company in the future. We are optimistic about the company's state-owned enterprise reform and industrial transformation, and maintain the “buy” rating. If we don't consider Ecco's merger for the time being, we forecast that the company's operating income for 16/17/18 will be 14.66/17.74/2.135 billion yuan, respectively, and the net profit attributable to listed companies will be 7.43/16.11/50.41 million yuan, respectively. If Ecco's merger factors are taken into account, according to performance promises (2015-2017), the company's net profit for 16/17 is estimated to be 9193/12061 million yuan, respectively, and the EPS after maximizing the share capital increase is about 0.15/0.20 yuan (the maximum number of shares issued may be 203 million shares). The company's strategic transformation trend is improving, and the integrated circuit testing industry is heavily supported by the government. There is huge room for further development in the integrated circuit field in the future. Furthermore, the holding subsidiary China University of Science and Technology is expected to achieve a breakthrough in the military industry business in Hong Kong. Integrated circuit+military industry is a strong driving force for the company's rapid development in the future. According to the valuation level of comparable companies, a valuation level of 150 times in 2016 was given, corresponding to the target price of 22.5 yuan, maintaining the “buy” rating. Risk warning: short-term general market systemic risk; corporate transformation risk.