Incident: On April 22, 2016, the company released its 2015 annual report. Revenue was 1.82 billion yuan, up 19.58% year on year, and net profit was 64.81 million yuan, up 18.28% year on year. In the first quarter of 2016, revenue was 518 million, up 27.35%; net profit was 24.62 million, up 33.74%. The company estimates that from January to June 2016, net profit will also increase by 30%-60% to 49.52 million to 60.95 million. Comment: 1. Benefiting from steady growth, real estate inventory removal, renovation and decoration projects, and photovoltaic sector renovation, revenue and profit increased steadily over 15 years. The traditional business is expected to continue to grow over the next 16 years. In 2015, the company's revenue was 1.82 billion yuan, up 19.58% year on year, and net profit was 64.81 million yuan, up 18.28% year on year. The company is mainly engaged in the design and construction of public decoration projects such as hotels, office buildings, grand theaters and subways, and fine decoration of high-end residences. Benefiting from steady growth, the removal of real estate inventory, and the rapid increase in renovation and decoration projects, the company's traditional building decoration business grew steadily. The company also signed an old building renovation design and construction order, mainly represented by the CTV Fengde Copyright Industrial Building (formerly Wutongshan Boya Building No. 1), etc., and has followed up on a number of old renovation projects, increasing the market's acceptance of the company's design and construction technology in relation to the old renovation. At the same time, the company's entry into the photovoltaic industry has also given the company a clear competitive advantage in undertaking the interior and exterior business of photovoltaic construction projects, and has achieved actual results in construction orders. The traditional business is expected to continue to grow over the next 16 years. 2. The photovoltaic business is the second key development business; mastering photovoltaic installation technology and module installation teams may enter the photovoltaic EPC field; revenue and profit are expected to continue to grow in 16-17. The company positions the photovoltaic power generation industry as the second key development business. The company cooperated strongly with Xinyi Solar to invest in the construction of a photovoltaic power plant. The two sides jointly invested in the 100MWp photovoltaic power plant project in Baitafan Township, Jinzhai, Anhui. The construction work is progressing smoothly. In addition, the company independently invested in the construction of the “Credit Suisse New Energy (Xinfeng) Co., Ltd. 30MWP agricultural and solar complementary photovoltaic power generation project in Zhengping Town” in Xinfeng, Jiangxi. As the company actively enters the photovoltaic field, it is expected that the company's PV installed capacity will grow rapidly in the later stages. We have also trained a professional team for the installation of photovoltaic power plants. We believe that the company may enter the photovoltaic EPC field in the future. The company expects the company's net profit to increase by 30%-60% from January to June 2016, from 49.52 million to 60.95 million. This is mainly due to increased revenue from the main business and grid-connected photovoltaic projects. We believe that as the company promotes the construction and operation of photovoltaic power plants and may enter the photovoltaic EPC sector, the company's revenue and profit are expected to grow at an accelerated pace. 3. Raise capital to build customized hardcover O2O platforms and photovoltaic projects, which are expected to greatly enhance competitiveness. The company is planning a private offering. It plans to issue no more than 349362.92 million shares. The reserve issuance price is 24.33 yuan/share, and the capital raised is no more than RMB 850 million. The application for the non-public offering of shares was approved. The company plans to use part of the capital raised from the non-public offering to build a customized hardcover O2O platform and marketing network upgrade project. Based on the big data center, the company will build an online design and decoration service platform, BIM information interaction platform, LBS platform and mobile Internet client, and build and upgrade regional marketing service centers offline, thus forming an O2O system and effectively integrating online and offline resources. The company's design and decoration business will gradually improve from the previous model of relying only on offline “regional marketing service centers” and online “three major platforms and mobile Internet clients” to provide customers with one-stop, platform-based services integrating various related businesses, including online and offline decoration consulting, customized hardcover, intelligent quotation, and after-sales service. The construction period of the project is 2 years, the expected internal rate of return is 20.57%, and the payback period (including the construction period) is 5.61 years. 4. Profit forecasting and ratings benefit from steady growth, real estate inventory removal, and renovation in the photovoltaic field. The company's traditional decoration business is growing steadily; the photovoltaic business is the second key development business, mastering photovoltaic installation technology and module installation teams, and may enter the photovoltaic EPC field; raising funds to build customized hardcover O2O platforms and photovoltaic projects is expected to greatly enhance competitiveness. Without considering the impact of this increase, the company's EPS in 2016-2018 is estimated to be 0.87 yuan, 1.20 yuan, and 1.55 yuan, respectively. The corresponding valuations are 44 times, 32 times, and 25 times, respectively, maintaining the “increase” rating. 5. Risks suggest that the building decoration industry is fiercely competitive; customized hardcover O2O platforms fall short of expectations; photovoltaic power plant development falls short of expectations; non-public offerings cannot be successfully completed