Event: On August 16, the company released its 2017 semi-annual report, achieving revenue of 355 million yuan, a year-on-year increase of 48.77%; realized net profit of 54 million yuan, a year-on-year increase of 77.22%; net operating cash flow of 578.03 million yuan, EPS of 0.49 yuan, ROE (weighted) of 6.69%, and gross sales margin of 29.49%, a year-on-year decrease of 1.33 pct. The leading domestic panel furniture machinery company is expected to maintain a relatively rapid growth in performance throughout the year. The company is a professional supplier of complete equipment for panel furniture production lines, focusing on the field of panel furniture machinery. According to the company announcement, 2017H1's automatic edge banding machine revenue was 137 million yuan, an increase of 51.63% over the previous year; the CNC board saw achieved revenue of 59 million yuan, an increase of 40.4% over the previous year. The main reason is that the furniture market has improved, and the custom furniture market has grown significantly. Moreover, the company responds to the new demand for flexible production of customized furniture for the whole house, and the automated production line it produces has been recognized by the market. In the first quarter of 2017, the company achieved revenue of 139 million yuan, an increase of 48.85%; net profit of 17.33 million yuan, an increase of 71.04%; in the second quarter of 2017, the company achieved revenue of 215 million yuan, an increase of 48.72%; and net profit of 3.623 billion yuan, an increase of 80.49% over the previous year. Currently, the company has plenty of orders in hand, and it is expected that the annual performance will continue to grow at a relatively rapid pace. The company vigorously researched and developed technology, and the processing center became a new performance growth point. Nanxing Equipment has industry-leading R&D capabilities and is vigorously developing technology research and development. According to the announcement, the company invested 15.21 million yuan in R&D in 2017 H1, an increase of 7.6163 million yuan over the same period last year. It has successfully developed a variety of new furniture equipment, such as large board cutting processing centers, wood composite processing centers, CNC drills, and pass-through CNC drills. Along with the recovery in domestic sales market demand, the company's products are being transformed according to changes in market demand, increasing the market share of processing center products. Sales of flexible production units and high-end CNC equipment in machining centers have increased dramatically. The 2017H1 machining center achieved revenue of 79 million yuan, an increase of 60.38% over the previous year, accounting for 22.22% of operating income. It is expected that the sales volume of processing centers will continue to rise. In the future, we are optimistic about the increase in profits brought about by the production of processing center equipment and reduced costs after product maturity. The trend of custom furniture is on the rise, and information services collaborate to accelerate enterprise development. Compared with finished furniture, custom furniture has the characteristics of high space utilization, strong individuality, and overall aesthetics, and is an inevitable product of consumption upgrading. According to the Intelligent Research Consulting Report, the penetration rate of customized furniture in China is currently around 20%, while the penetration rate in European and American countries has reached more than 70%. There is huge room for growth in the long run. The company previously announced that it plans to acquire an integrated Internet service operator. Currently, the asset acquisition is in the negotiation stage. The company's move is aimed at further improving the company's informatization service level and better adapting to the flexible production of customized furniture. We believe that the target of the company's proposed acquisition forms good coordination with the company's business. After successfully completing the acquisition, the company will further expand its advantages in providing overall customized furniture solutions. Investment advice: The company's 2017 H1 performance exceeded market expectations, and custom furniture dividends were released ahead of schedule. We expect the company's revenue in 2017-2019 to be 644 million yuan, 865 million yuan and 1,193 million yuan respectively, with growth rates of 28.1%, 34.3%, and 38.0% respectively, and net profit growth rates of 45.6%, 38.9%, and 41.4% respectively, with outstanding growth; continuing to give buy-A investment rating, with a target price of 51.00 yuan for 6 months. Risk warning: The popularity of custom furniture falls short of expectations, and market competition is intensifying.