Incident: The company released its semi-annual report on the evening of August 20. During the reporting period, the company achieved operating income of 1,623 billion yuan, an increase of 57.77%; achieved net profit attributable to shareholders of listed companies of 99.1946 million yuan, an increase of 9.62% over the previous year; and achieved basic earnings per share of 0.16 yuan, an increase of 6.32% over the previous year. Key investment points: Expenses were well controlled during the period, and the goodwill balance was further increased in the second quarter of 2017. The company achieved operating income of 1,016 billion yuan, an increase of 26.87% year on year and 67.67% month on month; net profit to mother of 77.5989 million yuan, an increase of 7.17% year on year and 259.33% month on month. The company's expenses were well controlled during the reporting period. The sales expense ratio and management expense ratio were 5.49% and 9.01%, respectively, down 0.9 and 2.71 percentage points from the same period last year. During the reporting period, the company's non-operating income was drastically reduced. There was no government subsidy revenue in the first half of the year, compared to 37.044 million yuan in the same period last year. In terms of profitability, during the reporting period, the company achieved a gross sales margin of 23.67%, down 3.30 percentage points from the same period last year; achieved a net sales margin of 6.19%, down 2.52 percentage points from the same period last year. In terms of balance sheet, the company transferred 100% of Zhishan Intelligent Control's shares during the reporting period. The balance at the end of the goodwill period rose further from 1.120 billion yuan in the same period last year to 1,463 billion yuan, and the potential risk of impairment of goodwill increased. The robotics-related business is developing smoothly. It is expected that during the reporting period, the company's robot and motion control products will achieve operating revenue of 1.151 billion yuan, an increase of 91.25% over the previous year, accounting for 70.92% of total revenue; achieving a gross profit margin of 20.15%, down 1.75 percentage points from the same period last year. Among them, the wholly-owned subsidiary Zhongweixing achieved operating income of 102 million yuan during the reporting period, an increase of 28.34% over the previous year; realized net profit of 255,300 yuan, compared to 14.751 million yuan in the same period last year. Xiaoao Xiangrong achieved operating income of 156 million yuan, a year-on-year increase of 30.75%; realized net profit of 23.3075 million yuan, an increase of 3.41% over the previous year. Huitong Technology achieved revenue of 610 million yuan, completed 58.94% of revenue for the full year of 2016; realized net profit of 683.453 million yuan, and completed 100.67% of net profit for the full year of 2016. In terms of the robotics business of the division, from January to June 2017, Xinshida Robotics achieved revenue of 37.4306 million yuan, an increase of 74.54% over the previous year; realized net profit of 15.613,800 yuan, compared to -9.717,600 yuan in the same period last year. During the reporting period, the company's self-produced robot sales exceeded the 1,000 unit mark for the first time, and the annual sales target of 1,600 units may exceed expectations. On the other hand, during the reporting period, the company successfully acquired 100% of Zhishan Intelligent Control's shares at a price of 405 million yuan. Zhishan Intelligent Control specializes in the development and sale of servo drives and other motion control system products. The main products include all-in-one servo machines, fully digital intelligent servos, stepper control units, etc., which mainly correspond to downstream industries, including textile machinery. In 2016, Zhishan Intelligent Control achieved operating income of 12.8565 million yuan and net profit of 546,200 yuan. According to performance promises, Zhishan Intelligent Control's net profit after deduction from 2017 to 2019 was not less than 28 million yuan, 35 million yuan, and 42 million yuan, respectively. Maintaining the “Recommended” rating, the company's robotics and motion control business has maintained rapid growth, and the “key core components - main body - engineering application - telematics” industry chain layout is being steadily recommended. EPS from 2017 to 2019 is estimated to be 0.30 yuan, 0.35 yuan, and 0.39 yuan, respectively, corresponding to the current price-earnings ratio of 37.92 times, 31.68 times, and 28.46 times, respectively. Maintain a “Recommended” rating. Risks suggest that the boom in industrial robots falls short of expectations; risk of impairment of goodwill; and rising raw material prices.