The acquisition approval was successfully obtained, and the company's acquisition of Runxing Technology successfully obtained approval for entering intelligent manufacturing and starting a second development. It is expected that distribution will begin soon. Runxing Technology is the first tier manufacturer of CNC equipment in China. Currently, the industry's middle- and low-end plastic cases are transitioning to metal cases, downstream production capacity supply is concentrated, and large metal manufacturers continue to accelerate CNC expansion; the market understands that Japan's Fanuc & Japan Brother CNC is currently in short supply, providing a good opportunity for domestic CNC manufacturers to expand their market share; stainless steel frame processing time is longer, driving CNC demand; Small metal parts are on the market and expanding production, increasing CNC demand; Equipment performance upgrades have prompted old CNC equipment to enter the renewal cycle. The company's ability to expand downstream customers is extremely strong, and the order share of BYD Electronics, a major customer, has risen to nearly 50%. The company currently ships 1000-1200 units per month, making a profit of 45,000 to 50,000 yuan per device. Currently, production is scheduled until next year. According to the aforementioned calculation of global smartphone shipments, we expect that if this penetration rate increases by 10% every year in the future, production of about 147 million new metal cases will be added every year. The industry average yield rate is 70%, and the CNC processing time for a single-piece metal case is 40 minutes. If each CNC machine works for 300 days* 24 hours, its annual output is 0.76 million metal cases, then due to the increase in the metal penetration rate, the annual production demand for CNC is 19,300 units. At the same time, according to the company's acquisition specifications, if calculated according to the 5-year renewal cycle, the current demand for CNC processing equipment to be replaced each year is 32—415 million units. Without considering the demand for new equipment such as ultrabooks, tablets, and smart wearable devices, etc., the annual demand for drilling and processing centers is at least 52,500 units. If the unit price is 220,000 yuan/unit, the annual market space is kept at 11.55 billion yuan. Engraving machines and industrial machine tools are the focus of the future. The company's market share is expected to increase, and carving machines+industrial machine tools will gain strength in the future. The company's new plant is expected to be put into operation early next year. It mainly produces engraving machines and industrial CNC equipment, and the production capacity of precision carving machines is planned to be 500 units/month. With the spread of wireless charging/5G communication, the metal case shielding problem will become the biggest bottleneck, and the non-metallic back cover has become the easiest and most feasible solution. 2.5D glass and 3D glass have begun to accelerate penetration this year. At the same time, Apple's launch of a double-sided glass design this year is expected to drive the industry's investment boom. The downstream industrial CNC is mainly used in aerospace, automobiles, military, ships, etc., and is known as the “mother aircraft” in the industrial field. In the future, the company is expected to gradually seize the market share of companies such as Shenyang Machine Tool and Dalian Machine Tool. Downstream demand continues to be strong, stainless steel prices are rising, and traditional business is growing rapidly. The parent company Huadong Heavy Machinery specializes in port equipment and stainless steel trade. Shipping will recover from this year to next year. Container shipments have increased dramatically, and port trade has been active. The company's port crane business increased 114% year on year in the first half of the year. The rise in steel prices led to an increase in the company's stainless steel trade, and the interim report revenue increased by 109% over the same period last year. Profit forecast: Assuming that Runxing Technology achieves consolidation in the last two months of 2017, the company is expected to achieve operating income of 3,097 billion yuan, 6.568 billion yuan, and 9.124 billion yuan in 2017-2019. Net profit attributable to the parent company is 95 million yuan, 647 million yuan, and 900 million yuan respectively, and EPS is 0.09 yuan, 0.63 yuan, and 0.88 yuan respectively, maintaining the “buy” rating. Risk warning: macroeconomic decline, weak downstream demand sustainability