The results achieved rapid growth in the first half of the year: the company released the 2017 semi-annual report to achieve revenue of 921 million yuan, an increase of 72.59% over the same period last year, and the net profit of 100 million yuan, an increase of 34.56% over the same period last year. From a quarterly point of view, Q2 achieved revenue of 548 million yuan in a single quarter, an increase of 76.77% over the same period last year, and a net profit of 51.72 million yuan, an increase of 31.44% over the same period last year.

The performance of industrial automation has doubled, and the revenue of electric power automation has increased steadily. The revenue of 2017H1 industrial automation business reached 557 million yuan, an increase of 120.26% over the same period last year, with a gross profit margin of 33.11%. This is mainly due to the transformation of the company from providing a single intelligent robotic arm to a customized integrated system service provider, so the contract sales revenue is growing rapidly, but the gross profit margin of the contract income is lower than that of a single product. The revenue of electric power automation business reached 344 million yuan, an increase of 23.76% over the same period last year. Shanghai Yongqian realized revenue of 296 million yuan and net profit of 36 million yuan; Intelligent Electric realized revenue of 298 million yuan and net profit of 32 million yuan; Guanzhi Automation realized revenue of 208 million yuan and net profit of 25 million yuan; and Huaxiao Precision realized revenue of 57 million yuan and net profit of 5.8735 million yuan.

The layout of the whole industrial chain of intelligent industrial production, and the market scale of the robot industry is huge. In recent years, the company has integrated several advanced enterprises in the field of intelligent manufacturing through epitaxial expansion, and the synergy effect is obvious. its industrial automation business realizes the complete industrial chain layout of "intelligent transfer manipulator (hand)-AGV (foot)-flexible production line (body)", provides customers with intelligent solutions covering the whole business chain, and creates "tailor-made" in the field of industrial intelligence. To provide customers with integrated integrated solutions, so as to form an industrial platform with core competitive advantages. With the full implementation of "made in China 2025" and "Robot Industry Development Plan (2016-2020)", China's robot industry has begun to be applied and promoted, and is gradually developing in the direction of middle and high end and artificial intelligence. coupled with the boost of the "New Generation artificial Intelligence Development Plan", the robot industry will be more closely integrated with cloud computing, big data, artificial intelligence and other advanced technologies in the future. China's robot industry is expanding rapidly and is expected to reach $6.28 billion in 2017, said Xin Guobin, vice minister of industry and information technology. The scale growth rate of China's robot industry has basically maintained more than 20% in the past five years. China will become the largest application market in the world for five consecutive years, and its proportion in the global industrial robot market will increase from 1 to 3, bringing great challenges and opportunities to the development of the company. The company reported in 2017 that it decided to invest 1.1 billion yuan to build the intelligent robot and artificial intelligence industry base project of HKUST to speed up the cooperative research and development of artificial intelligence and industrialization promotion, innovate and cultivate new business, at the same time consolidate and expand the company's intelligent manufacturing business advantages, enhance the company's profitability.

Strengthen technological innovation and create a strategic layout of "artificial intelligence + health". The company increased its R & D investment, and the 2017H1 R & D expenditure reached 61.45 million yuan, an increase of 57% over the same period last year. During the reporting period, the company gave full play to the technical advantages of industrial automation and rich experience in industry-university-research cooperation, and realized joint innovation with customers based on industrial big data through the way of "industrial robot + artificial intelligence". Actively carry out product and technology predictability research and development. The intelligent special robots independently developed by the company-tunnel intelligent patrol robot, substation intelligent patrol robot and distribution station intelligent patrol robot, expand the application of artificial intelligence technology in subdivision fields such as power system inspection. Relying on the Fudan-University of Science and Technology Intelligent Robot Joint Laboratory, we closely focus on the application of brain-like artificial intelligence in the medical and health field, including medical image intelligent reader, health consultant robot and so on. layout of artificial intelligence in the field of medical and health, deepen the company's "artificial intelligence + health" strategic layout. The company continues to improve the ability of independent innovation, enhance the driving force of endogenous growth, drive the development of the company with innovation, and improve the core competitiveness of the company.

Investment suggestion: the company's net profit from 2017 to 2019 is expected to be 3.42max 4.36 / 526 million yuan and EPS 0.47max 0.60max 0.72 yuan respectively. As the leader of the domestic intelligent automation industry, the company actively carries on the industrial chain layout through epitaxial mergers and acquisitions, and has a broad space for development. Continue to give the company a buy-A rating with a 6-month target price of 35.00 yuan.

Risk hint: the risk of macroeconomic fluctuations, downstream demand is not as expected.