Investment highlights: The company achieved net profit of 147 million yuan in 1H2017, an increase of 173.67% over the previous year. The company announced that 1H2017 achieved revenue of 1,372 million yuan, an increase of 94.94% over the previous year; achieved net attributable profit of 147 million yuan, an increase of 173.67% over the previous year; and achieved EPS of 0.33 yuan/share. Based on this estimate, in 2Q2017, the company achieved revenue of 728 million yuan, an increase of 80% over the previous year; achieved net attributable profit of 76 million yuan, an increase of 117% over the previous year. The sharp increase in the company's performance was mainly due to the combined contribution of Weifeng International. Since Weifeng International was included in the scope of the corporate merger in November 2016, 1H2017 has achieved revenue of 486 million yuan and net attributable profit of 98.45 million yuan. Moreover, the gross margin of this part of the business is high, so the increase in operating profit and net profit is higher than the increase in operating income. Excluding the impact of the merger, the company achieved revenue of 886 million yuan in 2017, an increase of 26% over the previous year; realized net attributable profit of 49 million yuan, a year-on-year decrease of 10%. The decline in net profit is mainly due to changes in the exchange rate of equity transfers payable unrelated to business activities - 10.54 million yuan. If this factor is not taken into account, the growth rate of the company's operating performance is about 9%. The traditional main business, conveyor belts, and Yingdong Mold have both shown steady growth. According to the company's semi-annual report, 1H2017, the company's light conveyor belt business achieved revenue of 272 million yuan, an increase of 29.06% over the previous year; realized net attributable profit of 29.8 million yuan, an increase of 18.92% over the previous year. Meanwhile, the subsidiary Yingdong Mold, which was acquired in 2015, achieved revenue of 570 million yuan, an increase of 23.92% over the previous year; achieved net attributable profit of 31.92 million yuan, an increase of 14.94% over the previous year. We believe that although the company's main business, lightweight conveyor belts, has achieved the largest share in the domestic market, it has been able to maintain relatively steady growth in the past two years due to the company's active development and increased demand for some downstream upgrades. However, the subsidiaries of Yingdong Molding, Beijing 35 and Cangzhou 35, are mainly supported by South Korea's Hyundai Motor Company. Due to the relationship between China and South Korea, the reporting period changed from profit to loss compared to the same period last year, thus affecting the overall performance of Yingdong Mold. In the future, as relations between China and South Korea pick up, Yingdong's performance is expected to grow even faster. Revenue from intelligent sorting has increased dramatically, and profits have yet to be unleashed. 1H2017's intelligent sorting business achieved revenue of 44.5 million yuan, a sharp increase of 34.85% over the previous year. However, since the business is still in the early stages of market expansion, fixed costs account for a relatively high level, and the company invested in research and development of a series of new products and technologies during the reporting period; as a result, gross margin fell 12.75 percentage points to 5.29% year-on-year during the reporting period, thus achieving net attributable profit of 2.15 million yuan, a year-on-year decrease of 303.42%. We believe that in the future, as the company quickly seizes market share, the profit level of this business will increase significantly, contributing to significant growth in performance. Profit forecasts and investment recommendations. We expect the company's EPS in 17-19 to be 0.79, 0.98, and 1.21 yuan respectively, giving 25 times the dynamic PE of 2017, a target price of 19.75 yuan for 6 months, and maintaining the “buy” rating. Risk warning. Conveyor belt revenue fell short of expectations, and mergers and acquisitions fell short of expectations.