Key investment events: The company released its semi-annual report. In 2017, H1 achieved operating income of 1.37 billion yuan, an increase of 94.9% over the previous year, net profit of 150 million yuan, an increase of 173.7% over the previous year, and net profit of 140 million yuan, a year-on-year increase of 180.6%. Significant increase in performance. The main reasons are (1) the subsidiary Wei Feng International also stated: during the reporting period, the subsidiary Wei Feng International achieved operating income of 486 million yuan, accounting for 35.4% of the company's total revenue, and net profit of 98 million yuan; (2) Yingdong Mold's performance grew rapidly: it achieved operating income of 570 million yuan, a year-on-year increase of 23.9%, net profit of 32 million yuan, a year-on-year increase of 14.9%; (3) rapid growth in the performance of the main traditional conveyor belt business: achieved operating income of 272 million yuan, a year-on-year increase of 29.1%, and net profit of 0.3 million yuan, year-on-year increase of 0.3 million yuan, year-on-year increase 18.9%. The gross margin of light conveyor belts is increasing year by year, and the product structure continues to be optimized. The company is a leading domestic lightweight conveyor belt, with a domestic market share as high as 11%. The company's lightweight conveyor belt products are mainly divided into ordinary polymer lightweight conveyor belts and thermoplastic elastomer conveyor belts. Among them, ordinary polymer lightweight conveyor belt companies have strong pricing power, and at the same time, the company has strengthened cost control, increasing the gross margin of this product year by year from 42% in 2012 to 48% in 2016, and further increased to 49% during the reporting period. Thermoplastic elastomer conveyor belts are high-end products in conveyor belts. The company has actively adjusted the product structure, benefiting from import substitution, and the share of high-end products is expected to continue to increase. The market space for high-end molding is vast, and the company is a core supplier of Tesla and LEGO. The company completed the acquisition of Yingdong Plastic and Weifeng International. On the one hand, it completed the upstream industry chain layout and entered the 100 billion mold market. On the other hand, it used its production base and technology to form a synergistic effect with the main business to build a chain plate conveyor belt, thus expanding the conveyor belt product structure. Yingdong Molding targets high-end automobile and home appliance brand users around the world. The company began to become a Tesla supplier in 2015 and will benefit from the dividends brought by Tesla's mass production; Weifeng International targets consumer industries such as toys and electronics, and is a LEGO supplier to a world-renowned toy company. Benefiting from the recovery of the toy industry, performance is expected to grow high. The intelligent sorting industry is on the cusp, and performance is expected to explode. The downstream application field of intelligent sorting is extensive, and the industry is entering a period of explosion. Demand in the downstream express delivery and e-commerce industry is expected to continue to grow by more than 30% in the next three years, and 2017 is the first year of the construction of a four-way, one-way intelligent sorting system, and the demand for smart devices for express delivery and e-commerce companies has begun to increase dramatically. The subsidiary Xinba Technology is a core partner of express delivery companies such as Shentong. The technical team comes from the Post Office and has rich project experience. The company's order volume increased dramatically in 2017, and performance is expected to experience explosive growth. Profit forecasts and investment advice. The EPS for '17, '18, and '19 is estimated to be 0.71 yuan, 0.94 yuan, and 1.19 yuan respectively. Referring to comparable company valuations, the company was given a valuation of 30 times in 2017, corresponding to the target price of 21.3 yuan. For the first time, coverage was given a “buy” rating. Risk warning: the risk of a sharp decline in the gross margin of light conveyor belts, the risk that subsidiary's performance will not meet expectations, and the risk that the intelligent sorting business will fall short of expectations.