Event: the company announced semi-annual report in 2017, the company's revenue in the first half of the year was 354 million yuan, an increase of 48.77% over the same period last year, and the net profit was 53.56 million yuan, up 77.22% over the same period last year. At the same time, the company made a forecast for the performance from January to September 2017, with an estimated net profit of 6786-81.43 million yuan, an increase of 50% to 80% over the same period last year.

The company reported results in line with market expectations, the high performance growth mainly benefited from the furniture enterprises' demand for customized furniture, intelligent production equipment increased significantly, the company's machining center and high-end CNC equipment sales increased significantly.

Domestic board woodworking machinery leader, woodworking center industry leader. The company covers a full range of plate woodworking machinery products, edge sealing machines, cutting board saws, multi-row drills, machining centers and other products, especially the machining center has a leading advantage in China. At present, the company is developing in the direction of integrated woodworking machinery production line.

Short-term benefit from real estate after cycle + custom home, long-term benefit from import substitution. The area of real estate sales began to grow rapidly in 2016, and woodworking machinery sales generally lagged behind real estate sales by about 1-1.5 years. At the same time, fast consumer culture led to the prosperity of custom furniture, domestic custom furniture penetration rate of less than 30%, far lower than 70% in Europe and the United States, downstream Sofia and other custom furniture enterprises capacity expansion increased demand for mid-stream equipment. In the long run, the company benefits from the improvement of industry concentration and import substitution. at present, the high-end equipment of woodworking machinery is monopolized by foreign enterprises, and the pattern of middle and low-end competition is scattered. In the future, leading companies are expected to achieve import substitution.

Profit forecast and rating: we expect the company's net profit in 2017-19 to be 1.13,1.48,187 million yuan respectively, the corresponding EPS is 1.04,1.36,1.72 yuan per share, and the corresponding PE is 36,27,21X respectively. Cover for the first time, give the company a "recommendation"

Investment rating.

Risk tips: downstream furniture manufacturers decline in prosperity risk; customized furniture penetration is not as expected risk.