The company's quarterly report was released. The company achieved total operating income of 306 million yuan from January to 2016, which was 357 million yuan for the same period last year, a decrease of 14.41% over the same period last year, and net profit attributable to listed companies of 3,317,000 yuan. The same period last year was 2,517,000 yuan, an increase of 31.73% over the same period last year. Net profit for January-June 2016 is expected to turn a loss into a profit compared to the same period last year, with a range of 10 to 15 million yuan. The loss-making subsidiary was divested, and the net profit turned a loss into a profit. The reason for the decline in the company's revenue in the first quarter was the decline in revenue from its main real estate business. The net profit attributable to listed companies for the full year of last year was -18.3593 million yuan. The first quarter of this year had already turned a loss into a profit of 3,317,000 yuan. The main reason is that after the divestment of the loss-making subsidiary Dacheng Energy in September 2015, losses of the holding subsidiary decreased year over year. The removal of inventories from the industry has led to a decline in gross margin, and the financial pressure on the company has gradually eased. Due to obvious regional differentiation and “classification regulation” in the real estate industry, the company's main business is under high pressure to remove inventory. The gross profit margin for the first quarter of 2016 was 19.13%, down 7.45 percentage points from the same period in 2015. Due to the decline in the scale of financing, the company's financial expenses ratio decreased by 4.28 percentage points compared to the same period in 2015, and the financial pressure has eased somewhat. In a situation where the company's main business is under pressure, finding new profit growth points has become an inevitable choice. The company has formulated a “one, two wings” strategic development to transform and upgrade to emerging industries. In a context where “classification regulation” will continue to be the main theme of the real estate industry, the company has set a strategic goal of “park operation and real estate as the base industry, and high technology, energy saving and environmental protection services as two wings” (that is, “two wings in one”) to promote the gradual transformation and upgrading of the company to emerging industries. The merger and acquisition of Ecco is a critical step in state-owned enterprise reform and industrial transformation. The company acquired 100% of Ecco's shares, taking a critical first step in state-owned enterprise reform and industrial transformation. 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. Meanwhile, semiconductors are an industry that is currently being vigorously developed in the country. As large domestic manufacturers such as SMIC expand production one after another, major international manufacturers 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. 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. At the same time, by strengthening research and development of laser processing technology and process improvement, 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 do not 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.