Core conclusion The boom in metal structural parts is expected to be maintained, and processing equipment will continue to benefit. Driven by increased metal frame penetration rate and demand for stock renewal, demand for CNC equipment is expected to remain high in the next two years, with an estimated market space of 20 billion yuan in 2018. Domestic CNC ushered in a golden time to replace imports. In recent years, the performance of domestic CNC equipment is close to that of foreign brand products, and advantages such as domestic brand prices and service have begun to be highlighted, and it has successfully entered large-scale downstream structural parts processors; mobile phone case processing market concentration has increased, domestic structural component manufacturers have accelerated, structural changes in downstream investors have favored domestic CNC equipment, and import substitution has ushered in prime time. Runxing Technology has a clear competitive advantage and has significantly benefited from import substitution. Runxing Technology was acquired by Huadong Heavy Machinery in 2017. Compared with other domestic CNC equipment companies, Runxing has competitive advantages in brand channels, product positioning and scale, and is expected to significantly benefit from import substitution. After benefiting from the expansion of the metal structural parts cycle in this round, if Runxing can draw on the growth experience of overseas giants and strengthen technology research and development and industry resource integration, it is expected to become a domestic CNC machine tool giant. For the first time coverage, a “buy” was granted, and the target price was 17.25 yuan. We expect the company's net profit for 2017-2019 to be 143 million yuan, 697 million yuan and 880 million yuan, respectively, corresponding to earnings of 0.14 yuan, 0.69 yuan and 0.87 yuan per share. The target price is based on 25 times the expected price-earnings ratio in 2018. Risk warning: downstream demand is slowing down, customer structure is relatively concentrated, etc.