Incident: The company announced its annual report. In 2015, it achieved operating income of 291 million yuan, a year-on-year decrease of 5.23%; net profit to mother of 36.8865 million yuan, a year-on-year decrease of 24.23%; EPS was 0.45 yuan; and plans to distribute cash dividends of 0.95 yuan (tax included) for every 10 shares to all shareholders. Comment: 1. Performance was slightly lower than expected. The main export to domestic sales continued to be adjusted. In 2015, against the backdrop of no significant improvement in the macroeconomic environment, sales of small gift products with a large number of companies and low unit prices increased, leading to a decline in operating income. At the same time, the company's channel layout gradually turned domestic, actively exploring the middle and high-end domestic markets for boutique goods and gifts, and the share of domestic sales revenue rose to 35.76% from 23.2% at the end of 2014. We believe that daily-use porcelain products themselves are highly irreplaceable, and with the gradual improvement of residents' cultural tastes, the domestic ceramic industry still has plenty of room for development, and the company's share of domestic sales revenue is expected to increase one step further in the future. Overall gross margin decreased by 1.78 pct to 31.33%, and sales and management expense ratios increased by 1.14 pct and 2.36 pct, respectively, which dragged down net profit. 2. The Industrial Fund began to anticipate transformation and set up the Guangdong Songfa Win-Win Industrial M&A Fund in the early stages of investing in equity mergers and acquisitions in emerging industries by investing in equity mergers and acquisitions in emerging industries. At the end of last year, it joined Bezao Technology and entered the field of social e-commerce operations, seeking breakthroughs in five major functions, including distribution systems, mobile shopping malls, product QR codes, user centers, and shopping mall counters, to create another important domestic sales channel, and form a positive consumer loyalty cycle driven by interpersonal sharing and word-of-mouth marketing. We believe that after the establishment of the Industrial Fund, participating in Bezao Technology may be the first step in the transformation of the company. With abundant industry project resources and strong execution, the company is expected to continue to transform in the next few quarters. 3. Maintaining the “Prudential Recommendation - A” rating We believe that the direction of development of the company since its listing is very clear. The main business is moving from export to domestic sales, and there is broad scope for social e-commerce development, and the expectations for the transformation of the establishment of an industrial fund are clear. Songfa Chuangying Industrial Fund is large in scale and is expected to provide large business support for the company's transformation; in addition, the company's shareholders also have extensive business reserves in the fields of health and home, which can provide reserve projects for the company's future business transformation. We expect EPS to be 0.55, 0.66, and 0.79 yuan respectively from 2016 to 2018, maintaining a “Prudent Recommendation-A” investment rating. Risk warning: The export market continues to be sluggish, and the development of domestic sales business falls short of expectations.