Tongfang Ted's 17-year net profit was 63.98 million yuan (an increase of 3.8% over the same period last year), compared with 0.0796 yuan in EPS. The net profit accounted for 28% of the annual profit in 2016, accounting for 26.7% of the profit in the same period last year. Ted's total revenue in the first half of 17 years was 642 million yuan (up 20% over the same period last year). Intelligent transportation revenue was 238 million yuan (up 29% year-on-year), accounting for 37% of the total revenue. Smart energy's revenue is 160 million yuan (up 53% year-on-year), accounting for 25% of total revenue (20% in the same period last year).

Smart energy business continues to explode this year. Revenue from the company's smart building section fell to 242m yuan (down 2 per cent from a year earlier), and its share of revenue fell from 46 per cent of 1H16 to 38 per cent, indicating that the company's construction business is still under pressure. Tongfang Ted's business mainly broke out into the transportation and energy sectors the transformation of the intelligent transportation and energy sectors Tongfang Ted's performance indicates the gradual progress of the company's transformation strategy and reflects our judgment on the company's growth expectations since 1H16. The company will focus more on EMC projects in the energy and subway sectors, thereby improving revenue structure and EBITDA rates. In addition, due to the Chinese government's stringent environmental requirements on the north, we expect to have more business in the energy business in the future. Due to the long-term expansion of revenue and the need for large advances to pay for the project, the company's cash on hand has dropped from 665 million yuan at the end of 2016 to 248 million yuan at present. In addition, the parent company Tongfang now owns 35% of Tongfang Tade. Tongfang needs to strengthen its absolute leadership over its subordinates, but we have not seen the actions of the parent company in the past year.

To maintain the buy rating based on the company's strategic transformation, we adjusted the company's 17e net profit per share from 0.37 yuan to 0.35 yuan (year-on-year increase of 21%) and 18-year EPS from 0.413 yuan to 0.399 yuan (up 13% year-on-year). The company is now valued at 6 times 2017 earnings, and the company's share price has room to fall. We lowered our target price from HK $4.5 to HK $3.0, implying a price-to-earnings ratio of 7.5 times 2017 earnings. With 23% room to rise, we maintain our buy rating.