Event: The company recently released its 2016 report. The company achieved operating income of 316 million yuan, an increase of 20.94% over the previous year; net profit attributable to listed shareholders was 38.89 million yuan, an increase of 16.40% over the previous year. Leading “Artificial Intelligence +” layout: The company has accumulated technology in artificial intelligence for more than 30 years. As the “artificial intelligence +” industry gradually applies and verifies the company's products, the company's leading edge in the industry will be consolidated. For example, the automatic passenger pass inspection system at Chengdu East Railway Station has been tested by 5 million people, and the correct recognition rate has reached 95.6%. In order to further develop its strategic layout, the company signed an agreement with Sichuan University in 2016 to jointly establish the “Sichuan University Intelligent Systems Research Institute”. At the same time, the company is taking the lead in applying artificial intelligence technology to transform and improve the automation level of existing air traffic control systems in China. It is expected to launch the first batch of air traffic control command safety monitoring products based on automatic voice recognition in 2017. Air traffic control and flight simulation projects grew rapidly: During the reporting period, the service revenue of aviation and air traffic control products was 149 million yuan, up 31.23% year on year, and gross margin reached 39.52%, up 0.66% year on year. As the company increased its market investment and the market began to grow rapidly, the total number of new contracts signed by the company in the field of air traffic control in 2016 exceeded 150 million, an increase of more than 50% over the previous year, contributing to the steady growth of subsequent company performance. At present, the company has put four A320 D-class flight simulators into training services, and the flight simulation business continues to grow steadily. Intelligent image technology leads the market: During the reporting period, the company relied on deep technology accumulation to develop intelligent virtual reality products such as multi-person interactive testing technology, interactive science classrooms, and virtual reality smart theaters. In particular, interactive science classrooms will bring a new experience to teaching. These products will enter the market in 2017, and their market performance is worth looking forward to. At the same time, during the reporting period, by using new artificial intelligence image recognition technology, the company achieved excellent results with an identification accuracy rate of 99.60% in tests of one million vehicles in a practical environment for automatic identification of vehicle number plates and types, ahead of the market. The high-precision 3D face camera and automatic face recognition products that the company began investing in a few years ago have made major breakthroughs and have begun to produce benefits. With the gradual improvement of technology and products, future growth can be expected. Investment advice: We expect the company's EPS for 2017 and 2018 to be $0.23 and $0.26, respectively. Based on the above judgment, an “increase in holdings” rating was given. Risk warning: increased competition, slowing industry growth, etc.