Incident: On August 20, 2016, the company disclosed its 2017 semi-annual report. During the reporting period, the company achieved operating income of 1,623 billion yuan, a year-on-year increase of 57.77%, and net profit attributable to the parent company of 99 million yuan, an increase of 9.62% over the previous year. The increase in performance was in line with Shen Wan Hongyuan's expectations. The company's basic earnings per share during the reporting period were 0.16 yuan/share, an increase of 6.32% over the previous year. The company's weighted average return on net assets is 3.6%. Key investment points: The elevator business returns to the growth channel and is expected to reverse profits. During the reporting period, the company's elevator control products achieved revenue of 216 million yuan, an increase of 7.21% year on year; energy saving and industrial transmission products achieved revenue of 130 million yuan, an increase of 16.07% year on year. The company's traditional main business, elevator control products, achieved revenue growth through increased market investment. During the reporting period, the company was deeply involved in the field of energy-saving industrial products and focused on deepening business improvement from providing core component products to providing customers with overall electrical solutions. Since the decline in the company's traditional elevator products in 2015, the company has made efforts to cope. With stable and good product quality and customer base, revenue has returned to growth, and profit reversal is expected in the future through integrated solutions and operation and maintenance markets. The entire robotics industry chain has begun to bear fruit, and the business has maintained high growth. During the reporting period, robotics and motion control products achieved revenue of 602 million yuan, an increase of 306.64% over the previous year, accounting for more than 70% of revenue. The main robotics business entities performed well during the reporting period. Zhongweixing achieved revenue of 102 million yuan, Huitong Technology achieved revenue of 610 million yuan, Xiaoao Rongxiang achieved revenue of 156 million yuan, XinshiDa Robotics achieved revenue of 374 million yuan, and the business of various subsidiaries continued to grow (the above subsidiary data is non-consolidated). With the upgrading of the manufacturing industry, demand for industrial robots is rising, and the robot and motion control business is expected to maintain rapid growth in the future. The acquisition of Zhishan Intelligent Control consolidated the strength of driving products, and extension is still an important means of development for the company. In June 2017, the company acquired 100% of the shares of Hangzhou Zhishan Intelligent Control Technology Co., Ltd. Zhishan Intelligent Control uses motion control units such as integrated servo all-in-one machines, fully digital intelligent servos, and stepper as its core products. Currently, it mainly focuses on textile machinery and CNC machine tools, and has a high market share and popularity in the segment. In the future, the company will fully explore the product industrialization, specialization and cost control advantages of Zhishan Intelligent Control, and make full use of the mature industrial special aircraft market and service channels of Zhishan Intelligent Control, so that servo products can quickly achieve market scale and coverage, and achieve effective industry expansion. After several rounds of acquisitions in the past few years, the company has gradually achieved a complete industrial chain layout of “key core components - body - engineering application - telematics”. The development of the intelligent manufacturing sector is changing rapidly, and we expect that in the future, epitaxial mergers and acquisitions will still be the main means for the company to further consolidate its business layout. Profit forecast and valuation: Elevator business revenue rebounded better than expected. The company's robotics business revenue is growing rapidly, but profitability still needs to be verified. We lowered our profit forecast. The company is expected to achieve net profit of 234 million, 295 million, and 355 million yuan (340 million and 380 million in 17-18 years before adjustment), with corresponding earnings per share of 0.38 yuan, 0.48 yuan, and 0.57 yuan/share (0.55 and 0.61 yuan/share for 17-18 years, respectively). The current stock price corresponds to 17-19 Annual PE is 30 times, 23 times, and 20 times, maintaining an “increase” rating.