The company released its semi-annual report. In the first half of 2017, it achieved revenue of 733 million yuan, an increase of 18.07%; net profit of 231 million yuan, an increase of 18.65% over the previous year; net profit after deducting non-return to the mother, a 20% increase; and EPS of 0.22 yuan. Among them, the second quarter achieved revenue of 418 million yuan, a sharp increase of 53% over the previous year, 33% over the previous year, and net profit of 120 million yuan, an increase of 42.56% over the previous year, an increase of 8% over the previous year. The 18% increase in revenue was mainly due to the release of production capacity and the Xinhuachang Timber Industry. The acquisition of Jiashan Xinhuachang Timber Industry in March greatly increased production capacity. The target company promised that the net profit for 2017-2019 would not be less than 2000, 25, and 30 million yuan respectively, and the annual base purchase volume of Xinhuachang Group's target companies should not be less than 100,000 cubic meters at this stage. On the other hand, the first half of the year benefited from the recovery of international trade, the recovery of the shipping industry, and the recovery of container manufacturing. Increased container holdings and the renewal of used containers released demand for bottom plates, and the company's traditional container bottom plate business benefited. Furthermore, the continuous increase in industry concentration is also an important reason for revenue growth. Small workshop-style enterprises are not as large in scale and performance as large enterprises. The domestic natural forest harvesting policy and risk restrictions on imported hardwood from abroad are strictly implemented, and the cost disadvantage of small enterprises is prominent. The company's base market share is 15% +, and the acquisition of Xinhuachang Timber is expected to achieve 25% +, which will fully benefit from the trend of increasing industry concentration. World rental giants such as Florens and Seacube were gradually expanded during the reporting period, and certification work for customers such as Maersk was promoted. The company continued to take advantage of its cost advantage during the reporting period. The operating cost growth rate of 8.78% was far lower than the revenue growth rate, and the comprehensive gross margin reached 44.98%, an increase of 4.7 percentage points over the previous year. The gross profit margin for the second quarter was 46.92%, up 8.64 percentage points year on year and 4.54 percentage points month on month. Cost control mainly comes from the following aspects. First, the company owns 650,000 mu of forest land, actively integrates forest farms to strengthen supply-side control of raw materials, and second, uses secondary small fuelwood modification technology to replace tropical broad-leaved forests to reduce raw material costs. Third, in terms of the cost of auxiliary materials, the independent development of quaternary resin adhesives has replaced the more expensive toxic phenolic adhesives, and the environmental performance has been enhanced. Fourth, COSB's fully automated production line greatly reduces labor costs. Furthermore, the direct sales model eliminates multi-level distribution links between foundries and intermediary dealers and shortens the industrial chain. The fee rate for the period increased significantly, up 5.65 percentage points from the previous year. Among them, the management expense rate was 9.29%, the biggest increase (4.46 percentage points), and management expenses also increased sharply by 127% year on year, mainly due to the increase in forest resource asset maintenance costs, and maintenance expenses of 37.28 million yuan, a sharp increase of 450% over the previous year. The sales expense ratio was 4.09%, a slight increase of 1.18 percentage points over the previous year, and sales expenses increased 66% year over year, mainly due to increased sales, which led to shipping expenses of 25.42 million, an increase of 75%. Promotion, exhibition expenses and hospitality expenses also increased significantly year on year. The financial expense ratio remained stable. The 18% increase in financial expenses was mainly due to increased interest expenses due to increased bank loans. In addition, bad debt losses in the current period were reduced by 1.58 million compared to 2.46 million in the same period last year. Combining the above factors, net profit of the mother increased 18.65% year on year, achieving a net profit rate of 31.47%, a slight increase of 0.1 percentage points over the previous year. The net profit rate for the second quarter was 28.6%, down 2.17 and 6.68 percentage points from the previous year, respectively. The company's production capacity frees up the market share of container floor panels, and the market share of container floor boards continues to rise. The prospects for upgrading the eco-friendly board business by taking advantage of the trend of prefabricated construction and foreign wooden house promotion experience guarantee future growth potential. The performance requirement for this year's exam preparation is 440,000+. We expect net profit from 2017 to 2018 to be 500 million yuan and 650 million yuan respectively, corresponding to EPS of 0.48 and 0.63 yuan, and corresponding PE of 20X and 15X, maintaining the buying rating. Risk warning: container demand falls short of expectations; prefabricated building promotion progress falls short of expectations