Event: Kangxin New Materials issued an announcement: In the first half of 2017, the company achieved operating income of 733 million yuan, an increase of 18.07% over the previous year, net profit of 231 million yuan, an increase of 18.65% over the previous year, and net profit after deduction of 229 million yuan, an increase of 20.0% over the previous year. Investment points: The container industry is picking up, and the advantages of leading companies are obvious: since 2017, international trade has picked up, the shipping industry has recovered, and container manufacturing has picked up. The increase in ownership volume and the increase in the renewal of used containers have led to an increase in demand for container bottom plate manufacturing. At the same time, with the full implementation of the “no oil and push water” policy for containers on April 1, and the industry's initiative to remove excess capacity, the Chinese container industry has begun to enter a new situation of green production and orderly and benign production. The quality requirements and technical barriers for container floors are very high. As a leading enterprise in the container floor plate industry, the company has the advantages of large-scale production and product performance, and will further expand its market share. COSB production line & self-developed technology, with obvious cost advantages: the world's first fully automated and digitized COSB high-strength targeted structural board production line developed by the company can effectively centralize labor costs and improve the utilization rate of production waste. Through independent research and development of second-smallest fuelwood modification technology, the company has realized the replacement of fast-growing timber with imported hardwood from tropical broad-leaved forests. At the same time, the company also owns its own raw material forests, grasps upstream forest resources, and strengthens control over the supply side of raw materials. In terms of accessories, the environmentally friendly quaternary resin adhesive developed by the company replaces traditional toxic phenolic adhesives. Through a number of measures, the company effectively controls costs and enhances production efficiency. Layout prefabricated wooden houses to create new profit growth points: In the second half of 2016, the company established a strategic policy for developing prefabricated wooden house project construction. Currently, the operation of the timber structure house manufacturing company controlled by the company is gradually on the right track: a fully automated German production line has been purchased; the villa model house, reception hotel, and three-story prefabricated model house projects are progressing steadily. Prefabricated construction is a major change in the way houses are built. Timber-framed houses have advantages in energy efficiency, safety, sound insulation, and durability, and the future market space is broad. Profit forecast and investment rating: We expect the company's 2017-2019 EPS to be 0.48, 0.58, and 0.68, respectively, and the corresponding PE is 20.76, 17.13, and 14.60 times, respectively. I am optimistic about the company's advantages in the field of woodland resources and prefabricated wooden houses, and give it a “buy” rating. Risk warning: (1) the risk of a sharp decline in container demand; 2) the development of the prefabricated wooden house business falls short of expectations; 3) the risk of a sharp rise in raw material costs.