Revenue and performance declined sharply in the first quarter of '16, and inventories increased. Subsequent deliveries are expected to accelerate. In 2015, Tianhuayuan's revenue decreased by 16.21% year on year, and net profit of the company fell by 42.43% year on year, mainly because the world economy slowed down, international commodity prices fell during this period, and the downstream industry of the company's special equipment products continued to be sluggish. Due to Q1 being a low delivery season, the company's revenue for the first quarter of '16 was 22.7545 million yuan, YOY -78.42%, and net profit of the mother was 6,021,700. Because the company's products are customized equipment, the inventory in the first quarter report of '16 reached 229 million, a considerable increase compared to 147 million at the beginning of the year. The increase in inventories is expected to increase subsequent performance. However, with short-term macroeconomic improvements and rising commodity prices, there is momentum for recovery in company performance. Deeply involved in energy saving and environmental protection, new products will be released in '16. Tianhuayuan's various new products are expected to improve performance in 2016:1) Raw coal pre-drying and urban sludge drying products will gradually become the pillar products of the company's development. The industry space is huge, and growth is expected to accelerate; 2) Low NOx combustion systems and ammonia nitrogen wastewater treatment complete technology are well received by the market. As the national pollutant emission policy becomes stricter and the demand for mandatory transformation of production capacity emissions is strong, the company's products continue to launch new products adapted to demand, such as PTA pressure filters, low NOx burners for pyrolysis furnaces, and overall casting tanks for hydrometallurgy Multiple series domestic exclusive The supply of products can quickly occupy the market; 3) In terms of energy saving and environmental protection technology and equipment, it has formed energy saving and environmental protection technologies and products represented by urban sludge pollution-free treatment technology, coal humidification technology and equipment, high ammonia nitrogen wastewater treatment technology, coal-to-natural gas waste heat recovery systems, ethylene cracker quenching boilers and combustion systems, multi-production high-temperature ash-containing gas vertical waste heat boilers, etc. After testing and verification in previous years, energy saving and environmental protection equipment recycling cycles are short, economic benefits are high, and customers are highly motivated to transform production capacity. The company's annual report plans revenue of 8-95 billion yuan in 2016. Considering the acceleration of national investment in 2016, the company's sales of various rapidly recycled energy saving and environmental protection products are eager to increase dramatically, which is expected to reach the planned limit. Increase development and focus on state-owned enterprise reform. The company privately issued an additional 700 million yuan, of which 500 million was used for the Nanjing Tianhua Phase II project (complete equipment for lignite drying and upgrading systems, complete equipment for sludge drying systems), and 200 million yuan was used to repay bank loans. It has now passed the preliminary review, and we expect the company to complete this private release in mid-'16. There are about 18 research institutes under the China Chemical Group, to which Tianhua Academy belongs. At the same time, the company is the only listed chemical equipment company under the group. We believe that during the 13th Five-Year Plan period, Tianhua Institute is highly anticipated to carry out state-owned enterprise reform. Performance forecast: The company's downstream industry is recovering in the short term, and the performance of new products is about to be released. We estimate that the company's net profit from 16-18 was 0.86, 1.16, and 139 million yuan, respectively, and the diluted EPS considering additional issuance was 0.18, 0.25, and 0.30 yuan/share. The company has transformed environmental protection equipment and is determined to increase its market value by about 6.2 billion yuan. The market space for new products is huge. As the only chemical equipment listed company under Sinochem Group, it is optimistic about long-term market capitalization space. The company was given a 16-year valuation of 85 times, a target price of 15.62 yuan, and a rating of increase in holdings. Risk warning: Downstream continues to be sluggish, new product implementation falls short of expectations, and additional distribution falls short of expectations.