Investment Essentials 1. Company Overview: Firmly transforming education, leading explosion-proof electrical appliance companies welcome the second spring. The company is a leading explosion-proof electrical appliance for mining, founded in Yueqing, Wenzhou. Since 2015, the company has successively held shares, acquired education companies such as Zhongling Network, Yali Technology, Ledi Technology, Orland Network, and Newfield, laid out the education industry, and established an education industry fund. The company is a leading explosion-proof electrical appliance for mining, founded in Yueqing, Wenzhou. Its products include mining explosion-proof, factory explosion-proof, electric power equipment, emergency rescue, monitoring and monitoring, etc. Due to the decline in downstream prosperity in the traditional main business, the company actively carried out main business adjustments and strategic upgrades, and acquired Taiyida and Dudley to achieve diversified development of business products. At the same time, since 2015, the company has successively held shares, acquired education companies such as Yali Technology, Ledi Technology, Newfield, and Shanghai Weile, and established the Education Industry Fund to focus on the strategic transformation of the education industry and enter the international education industry to enhance the company's sustainable development capabilities. 2. International education industry: consumption upgrade+policy increase, 100 billion market to be tapped. The company's strategic transformation took the lead in entering the field of international education. Since the education gap between China and foreign countries is difficult to close in the short term, and at the same time, the gap between schools in major cities is obvious and the cost of choosing a school is high, the development of the international education industry is accelerating. Influenced by driving factors such as consumption upgrades and policy increases, international education has shown two major trends. From a total perspective, the penetration rate of students studying abroad due to consumption upgrades has increased; from a structural point of view, the trend of underage will greatly increase the added value of the industry. Benefiting from the increase in the number of people and the increase in ARPU value, the international education market is booming, and the market space is expected to reach 300 billion yuan in 2016. 3. The company's expansion has accelerated and consolidated the international education industry chain. Currently, the company has acquired four education targets at an undervalued value to lay out the education industry chain. Among them, Yali Technology and Newfield are based on the field of studying abroad, and Ledi Network is developing an online education platform. It has an exclusive McGraw-Hill teaching content license and can be redeveloped. Shanghai Weile is committed to providing a full range of support and services for international courses and K12 education and training. Furthermore, the company has also invested in Hu Yanbin's Conservatory of Music Newban Culture through the Education Industry Fund to actively lay out fields of special education such as music and enrich the education system. 4. Investment advice: According to conservative estimates, the net profit of explosion-proof products and the acquisitions of Taiyida and Dadeli are expected to contribute a total of 65-75 million in net profit in 2016-2017, and the growth rate of traditional business is stable. Exam preparation results for the education target reached 44.8 million and 79.17 million, regardless of the new expansion of outreach for the time being. It is estimated that in 2016-2017, the company's diluted EPS will be 0.31 and 0.41 yuan, respectively, and the corresponding PE will be 58X and 44X respectively. We believe that the prosperity of the study abroad education industry continues to rise, companies are actively deployed, and the industrial chain is multi-point, which is a benchmark for high quality international education. Furthermore, the continued promotion of the Private Education Promotion Law will accelerate the capitalization process of education targets, and companies are also expected to continue to expand horizontally and vertically along the industrial chain through mergers and acquisitions. Therefore, companies should enjoy a certain valuation premium and be given a “recommended” rating for the first time. 5. Risk warning: the risk that the subject matter related to the acquisition will pass the review by the Securities Regulatory Commission, the risk that the integration of the education business will not meet expectations, etc.