Investment Highlights The company released its 2017 semi-annual report: the company achieved operating income of 296 million yuan in the first half of 2017, an increase of 19.86% over the previous year; realized net profit of 51.043 million yuan, a sharp increase of 246.74% over the previous year. High-voltage electrical inspection revenue led growth, and overall gross margin improved dramatically. In the first half of 2017, the company achieved high-voltage electrical appliance inspection revenue of 211 million yuan, an increase of 30.95% over the previous year, accounting for 71.70% of the company's main business revenue, which is the main reason for the company's revenue growth. The company achieved a comprehensive gross profit margin of 52.22%, an increase of 8.80 percentage points over the same period last year. The gross margin of all businesses increased significantly. The main reason is that the company's experimental system construction has gradually entered a harvest period, and the growth rate of depreciation expenses is far lower than that of revenue growth. The company is the absolute leader in the electrical appliance testing industry in China. The company is the only independent third-party private organization in China that can simultaneously provide low voltage/high voltage electrical appliance testing, and is the only laboratory in China that has both IECEE and IECEx qualifications so far, presiding over or participating in the formulation and revision of many national standards and industry standards. The one-stop testing service industry chain has now been opened. Downstream customers include international giants such as ABB, Siemens, Schneider, GE, etc., and the leading position in the industry is stable. Moreover, the company is still investing capital and personnel to carry out the 1200kV 150Ka UHV test system project and the 12Kv DC test system, further expanding the company's leading position in the field of high voltage electrical testing. Entering the inspection of automotive electrical appliances and military products, the company's development ushered in new opportunities. In June 2017, the company passed the feasibility certification for the construction of the “National Automobile Electrical Product Quality Supervision and Inspection Center” by the National Certification and Supervision Commission, which is expected to benefit from the rapid development of new energy vehicles and greatly enhance the company's profitability. In addition, the company is a military product testing agency approved by the National Defense Laboratory and licensed by the PLA General Logistics Department. In addition to high-pressure/low pressure testing and pulse testing, the company also has EMC electromagnetic compatibility testing, large-scale environmental laboratories, etc. As China's civil-military integration progresses, the company's military testing business is expected to expand. Profit forecast and rating: The company is a leader in the electrical appliance testing industry, and the military and automobile inspection businesses are expected to usher in rapid development. The company's 2017-2019 EPS is expected to be 0.15/ 0.22/ 0.28 yuan respectively, and the company's 2017-2019 EPS is expected to be 0.15/ 0.22/ 0.28 yuan, respectively, giving it an “increase in holdings” rating. Risk warning: Laboratory construction progress is lower than expected, new business development is lower than expected, depreciation risk.