Incident: Changrong Co., Ltd. announced that it plans to privately issue no more than 80 million shares, no more than 5 additional targets, and raise no more than 2 billion yuan in total capital, which will be used for the construction project of a new intelligent green equipment manufacturing industry demonstration base and a new intelligent green printing equipment R&D and innovation base construction project. Comment: 1. The company proposed the latest development strategy and refinancing requirements. Intelligence, digitalization, and greening are the development trends in the printing industry. The company proposed a new development strategy “leading printing equipment, extending the upstream and downstream industrial chain to achieve collaborative development of equipment manufacturing and printing industries”. The details include: (1) Using intelligence to build the world's leading printing equipment service supplier, and build an intelligent manufacturing and processing base for high-end equipment and components in China with printing equipment as the main body. (2) Build China's first new Internet+ printing model with cloud printing as the core, and develop high-end commercial and popular cultural consumer printing. (3) Connect with Internet and Internet of Things technology, play the role of capital markets, integrate high-quality resources, and enable the company to achieve new leapfrog and unconventional development. In order to focus on improving the comprehensive manufacturing capacity of smart factories, the company proposed a refinancing plan. 2. Review of business performance in the first half of the year and new development strategy Changrong Co., Ltd.'s total revenue for the first half of the year was 473 million yuan, up 26.17% year on year, net profit was 86.56 million yuan, up 30.58% year on year, and operating cash flow was 121 million yuan, up 123.4% year on year. Due to factors such as the slowdown in overall demand in the industry, the company's equipment delivery situation was basically the same as the same period last year, with net profit of 42 million yuan, the same as the previous year. From January to June 2015, Shenzhen Liqun Printing achieved revenue of 197 million yuan, an increase of 81.05% over the same period last year in May-June, net profit of 65 million yuan, and a significant improvement in cash flow. In the face of a slowdown in traditional business growth, the company carried out a smart factory strategic layout: cooperated with Cerudi to enter the India-China sector, acquired Heidelberg's post-press business to strengthen its product technology strength, joined Guilian Holdings (completed delivery in July), and signed a three-year smart chemical factory purchase order of 180 million yuan. The subsidiary Tianjin Rongcai has accumulated many years of experience in intelligent chemical factory software development and has had successful projects. The daily business volume of Tianjin Changrong Jianhaoyun Printing Technology Co., Ltd., a holding subsidiary cooperating with Taiwan Jianhao, has increased significantly, and the second half of the year will usher in a peak season. After moving into the new factory area in 2014, the cloud printing business officially began operating externally in April 2015. The daily transaction volume exceeded 400,000, 500 dealers and 10,000 members have been developed, and online promotion officially began in August. Sales revenue of 21.17 million yuan was achieved in the first half of the year, of which sales revenue of 2.09 million yuan was achieved in the first quarter, sales revenue of 19.08 million yuan in the second quarter, and the target for the whole year was 100 million yuan. Cloud Printing still lost 9 million in the first half of the year, and is expected to make a profit next year. The company also purchased quick-printing equipment for clothing printing from Sweden and plans to promote it online in the second half of the year. The plant and equipment for cloud printing are basically in place, and production capacity has been reserved. 3. Annual results and order situation In the interim report, the company predicted annual sales revenue of 1.25 billion yuan and expected to achieve net profit of 235 million yuan, which is slightly lower than our previous forecast. The contract amount for equipment that had been ordered as of June 30, 2015 was 252.04 million yuan (179.67 million in China and 72.37 million abroad). Orders increased by 28% in the first half of the year, mainly due to tobacco company tenders and equipment updates (orders not including Liqun). The orders were mainly delivered in the second half of the year. Since printing equipment is affected by the current macroeconomic situation, it is expected to grow little throughout the year. The growth point mainly comes from the contribution of Liqun and Guilian Printing's stable performance. 4. Fundraising projects have long been beneficial to the company's competitiveness. Since 2013, the company has increased investment in R&D of overall smart factory solutions. Up to now, it has successfully developed intelligent automated logistics systems, production process data collection systems, electronic positioning systems, and automatic paper pile conversion systems that can replace labor, and has invested more than 70 million yuan. The company plans to raise funds needed for long-term development through this non-public offering, increase investment in intelligent printing equipment technology research and high-end products, focus on building a new “Internet+Printing Intelligent Manufacturing” business model, implement smart product upgrades, strengthen the company's ability to provide services throughout the printing and packaging industry chain, consolidate the company's leading position in the printing and packaging equipment manufacturing industry, and achieve the strategic transformation of the company from a domestic post-printing equipment manufacturer to a smart factory solution provider and leading Internet printing service provider in the printing industry, and comprehensively enhance the company's core competitiveness and sustainable development capabilities. The construction period for the fund-raising project is about 2 years, and the project can achieve revenue of 2 billion dollars. The next two years will be Changrong's investment period. If the increase in sales is affected by the capital market, the company will start construction with its own capital. 5. Short-term refinancing puts pressure on stock prices. Although in the long run, refinancing helps the company complete a new strategy and open up the ability to form a complete smart factory solution from post-printing to digital inkjet printers, if 80 million additional shares are issued in the short to medium term, the share capital will increase by 23%, diluting performance. At the same time, due to the recent weakness in the A-share market, short-term increases put pressure on stock prices. However, according to the current refinancing process, it is expected that the increase will not be implemented until next year. The company will adjust the pace according to market conditions. If the increase cannot be implemented, it will use its own funds for construction. 6. Investment advice: Prudent recommendation -A does not consider additional issuance. Next year, it will benefit from cloud printing volume and profit, Guilian's equity investment income contribution, steady growth in strength, and a steady increase in printing equipment. We expect EPS of 0.65, 0.78, and 0.94 yuan in 2015-2017, and 40 times the dynamic PE next year. Considering that the market plummeted during the company's suspension of trading and that refinancing put pressure on stock prices in the short to medium term, the short-term investment rating was adjusted to a prudent recommendation. In the long term, I am still optimistic about the company's growth model of Internet+intelligent printing+mergers and acquisitions, and competitiveness.