Investment highlights: The global economy is recovering, and the port industry is picking up. Since this year, the overall operation of the world economy has improved, and the performance of the European and American economies in particular has improved. On the domestic side, due to the in-depth promotion of supply-side reforms, the domestic GDP growth rate in 17Q1 and Q2 reached 6.9%, achieving a slight recovery; at the same time, with the increase in demand for overseas trade, domestic import and export volume stopped falling and rebounded, achieving a relatively rapid recovery. Due to the improvement in the domestic import and export situation and the government's vigorous implementation of supply-side port reforms to release port productivity, since '17, the monthly year-on-year growth rate of major domestic port throughput has reached more than 7.5%. Compared with the growth rate level of around 2% in 2015 and 16, there has been a marked recovery in the port industry as a whole. It is located in a golden node, and the radiation area is well developed. Ningbo Zhoushan Port is located in the middle of mainland China's coastline. It is located at the hub where the “Silk Road Economic Belt” and the “21st Century Maritime Silk Road” meet. It directly faces East Asia and the entire Pacific Rim region, and is blessed with a privileged geographical location. As of May '17, trade cooperation has been achieved with more than 600 ports in more than 100 countries and regions, and 236 routes have been opened, including 114 ocean-going routes, with a route network covering all parts of the world. At the same time, the direct economic hinterland of Ningbo Port is Ningbo City and Zhejiang Province, covering the entire Yangtze River Delta region, radiating that the region's economic development is good, and the advantages of the hinterland are obvious. It has strong operational strength and is number one in the world in terms of cargo throughput. Ningbo Zhoushan Port is one of the few good deep-water ports in the world. It has excellent navigation conditions, and is also the port with the largest number of large and very large deep-water berths in mainland China. The port consists of 19 port areas, and the layout of the port areas is reasonable and well-arranged. Strong port operation strength has greatly attracted shipping companies, leading to rapid growth in port business volume. 17H1 achieved cargo throughput of 366 million tons, an increase of 12.30% over the previous year, ranking first in the world for 8 consecutive years. At the same time, the company has vigorously expanded its container business, actively cultivating the three major economic growth points of water transfer, sea-rail intermodal transport, and domestic trade container business, making the container business fourth in the world, with the highest growth rate among the five major ports in the world. Ningbo Zhoushan Port merged, and Zhejiang's five ports were integrated to ride the tide. After 10 years of preparation, Ningbo Zhoushan Port Group was inaugurated in 2015. The merger of Ningbo Port and Zhoushan Port has achieved complementary advantages, made up for their respective development limitations, and released new production capacity, bringing greater potential and vitality. Meanwhile, in 2016, Zhejiang seaport successively integrated Jiaxing Port, Wenzhou Port, Taizhou Port, Yiwu Port, and Ningbo Zhoushan Port. Currently, it has initially achieved a “integrated, two-wing, multi-connection” port development pattern with Ningbo Zhoushan Port as the main body, southeast Zhejiang coastal port and Hangzhou Bay port around northern Zhejiang as two wings, and joint development of Yiwu Port and other inland waterway ports. Since the merger, the superposition effect of the company's port has gradually become apparent, contributing greatly to the company's rapid growth in business volume and bottoming out in performance. It was covered for the first time, and a “increase in holdings” rating was given. We expect the company's net profit from 2017 to 2019 to be 2,685 billion yuan, 2,890 billion yuan, and 3.176 billion yuan respectively, corresponding to PE 29 times, 27 times, and 25 times, and the industry's 17-year weighted average PE 29 times. However, considering that the real estate business and financial business of the leading market capitalization SIPG contributed a lot of profit to lower the valuation, the actual valuation of the industry should be higher than the weighted value. Overall, we believe the company's current valuation is low, giving it an “increase in holdings” rating. Risk warning: The macroeconomic cycle fluctuates, port competition intensifies, and business volume declines.