Investment Highlights The company released its 2017 semi-annual report: the company achieved operating income of 355 million yuan in the first half of 2017, an increase of 48.77% over the previous year; realized net profit attributable to shareholders of listed companies of 53.5646 million yuan, an increase of 77.22% over the previous year, corresponding to EPS of 0.4899 yuan. The company expects net profit attributable to shareholders of listed companies to be 678.629-81,4354 million yuan from January to September 2017, an increase of 50%-80% over the previous year. The main products all achieved high growth, and processing centers led the growth rate. By product, in the first half of 2017, the company's automatic edge banding machine/CNC board saw/multi-row multi-axis drill/precision sliding table saw/precision table saw/processing center achieved revenue of 1.37/ 0.59/ 0.32 /0.32/ 0.79 billion yuan, respectively, an increase of 51.63%/40.40%/34.69%/40.89%/60.38% over the same period last year. On a quarterly basis, the company achieved revenue of 139 million yuan and 215 million yuan respectively in Q1 and 215 million yuan, an increase of 48.85% and 48.72% over the previous year, maintaining a good development trend. The company's comprehensive gross profit margin was 29.49%, a year-on-year decrease of 1.33 pct. By product, the gross margins of automatic edge banding machines, CNC panel saws, and machining centers were 31.36%, 41.20%, and 25.37% respectively, up 0.18pct., 0.76pct., and -4.01pct., respectively. The company's comprehensive gross profit margin was 29.49%, a year-on-year decrease of 1.33pct. The main reason is that the gross margin of processing centers has declined. Actively carry out new product research and development to meet the needs of customized furniture. As the market demand for personalized furniture increases, the market share of non-standard furniture has increased rapidly. In line with the furniture industry's new demand for flexible production, the company invested 15.2072 million yuan in R&D expenses in the first half of the year, an increase of 100% over the previous year. It successfully developed various new furniture equipment such as large board processing centers, wood composite processing centers, CNC drills, and pass-through CNC drills, etc., which have won market recognition and further confirmed and stabilized the company's position in the domestic panel furniture machinery industry. Profit forecasting and ratings: The company continues to adjust its product structure and launch multiple types of processing centers suitable for custom furniture, which has become a new engine for performance growth. It is estimated that the company's EPS from 2017 to 2019 will be 0.84/1.20/ 1.66 yuan, respectively, and the PE corresponding to the current stock price will be 45x/ 31x/ 23x, maintaining the “increased holdings” rating. Risk warning: New product market expansion falls short of expectations; real estate regulation risks.