Events: The company released its 2017 semi-annual report. During the reporting period, the company achieved operating income of 1,937 billion yuan, an increase of 113.81% over the same period last year; realized net profit attributable to owners of the parent company was 19.3 million yuan, an increase of 27.34% over the same period last year; net cash flow from operating activities was -86.14 million yuan, a decrease of 157.15% over the same period last year; and EPS was 0.028 yuan, an increase of 19.15% over the same period last year. In addition, the company expects net profit from January to September 2017 to change by 10%-40%, to 1764.59-22.4584 million yuan. Opinion: Revenue from the company's main business has increased, and gross margin has decreased. The company's traditional main business is mainly stainless steel gross profit. The stainless steel business segment accounts for 86.4% of total revenue. This business relies on the company's location, capital, resources, and information advantages, combined with a further increase in the production capacity of the steel industry. Revenue from this business is expected to increase steadily over a long period of time. The gross margin of stainless steel coil sales, which accounts for 73.46% of the stainless steel business, was 2.4%, down 1.14pct from the previous year. In addition, the gross margin of stainless steel furnace materials, which accounted for 20% of operating income, was 6.56%, an increase of 4.91 pct, and the overall profit margin was low. The operating income and operating costs of the lifting and transportation manufacturing industry increased by 143.11% and 232.58% respectively during the reporting period, due to the impact of the 2016 container handling equipment orders delivered to customers during the reporting period; the gross margin of the lifting vehicle manufacturing industry was 18.21%, a year-on-year decrease of 22.01pct. The reason is that there was a lot of export business in the same period last year. Foreign sales accounted for more than 80% of total revenue, and the gross margin of export products was high. Export business declined in the first half of this year. The acquisition of Runxing has entered the 3C automation industry, and the CNC business is prosperous. Future performance can be expected. The company will acquire 100% of Runxing Technology's shares at a price of 2.95 billion yuan. Runxing Technology's 2017-2019 performance promises net profit of no less than 250 million yuan, 300 million yuan and 360 million yuan. Currently, Runxing Technology's leading product drilling and processing center mainly targets the consumer electronics industry represented by smart phones, tablets, ultrabooks, etc. The industry has huge market capacity and is in a stage of rapid development, and development prospects are good. Furthermore, most of Runxing Technology's downstream customers are suppliers of precision metal structural parts for consumer electronics. Among them, BYD Electronics is the company's main customer, and is also an associated company, which helps the company maintain steady growth in CNC drilling and processing center orders. Investment recommendations and ratings: We expect the company's 2017-2019 operating income to be 4.5 billion yuan, 7.4 billion yuan and 102 billion yuan respectively, net profit of 93 million yuan, 240 million yuan and 3.1 billion yuan respectively, earnings per share of 0.1 yuan, 0.26 yuan and 0.33 yuan respectively, and corresponding PE of 111X, 43X and 33X respectively, giving a “recommended” rating. Risk warning: The stainless steel business declined, and the CNC business fell short of expectations.