Short-term gross margin was under pressure, but the outlook for 2016-17 improved and the 2015 earnings per share forecast was lowered by 10%, mainly due to lower gross margins for major automobile molds in the second half of the year than expected and the lack of new product launches. However, the gross margin for 2016-17 will rebound, and our current forecast for earnings per share is 1-6% higher than the market. Smart home/drone/car mold and injection molding will usher in new opportunities. The 2015-17 revenue and profit per share CAGR are expected to reach 21% and 27%, respectively, optimistic about the high-quality customer base and good product cycle, and maintain buying ratings. Based on 9.3 times the industry average, the 2016 predicted price-earnings ratio, the new target price of HK$2.81, 2015 profit margin and communication equipment Polycom revenue growth fell short of expectations. After recent communication with management, we adjusted our earnings per share forecast for 2015-17. The reasons include: 1) The cost of oversized automobile molds was higher than expected, leading to pressure on gross margin in 2015 ( The company's gross margin is expected to fall 0.7 percentage points year over year to 26.9%) and 2) Communication equipment (Polycom) revenue growth in 2015-17 is conservative. The CAGR is expected to be 9%, which is lower than the previous forecast of 13%, and the revenue share will drop from 23% in the first half of 2015 to 17.5% in 2017. Continuing to win new orders, the 2016-17 ROE is expected to remain above 30%. We expect the CAGR of Dongjiang Group's 2015-17 revenue and earnings per share to be 21% and 27% respectively, and the ROE will remain above 30% due to: 1) the company continues to win new orders, including plastic injection molding for large car molds (Volkswagen), smart homes (Nest) /drone (GoPro), etc., 2) The profit margin of large automobile molds rebounds (expected to reach 28.6% in 2017, compared to 26.9% in 2015) and 3) Two new production lines will be added in 2016 (the company raised its 2016 capital expenditure guidelines by 50% to HK$120 million). Our net profit forecast for 2016-17 is 1-6% higher than the market, mainly because after acquiring Germany's S&B Company last year, the company received more orders from leading German automobile companies. Apart from Germany, the company is in talks with another high-end car brand to set up a joint venture in India. Maintaining the buying rating, the new target price is HK$2.81 (room for growth of 30%). Thanks to the company's high-quality and diverse customer base and a high dividend rate of 35% + (the yield in 2016 was 5%), we maintain our long-term positive view of Dongjiang Group. Although the manufacturing costs of the large-scale automobile mold business were slightly higher than expected, putting pressure on short-term profit margins, we maintained our buying rating and gave a new target price of HK$2.81 based on the predicted price-earnings ratio for 2016, 9.3 times the industry average. Key risks include loss of key customers, product launch delays, and slower than anticipated merger integration.