The Mountain Securities “Small but Beautiful” series of reports focuses on exploring small market capitalization, high growth, and high quality targets. The scope covers, but is not limited to, the quantitative combination of Mountain Securities's double sword, focusing on the company's industry prospects, technological innovation, business model, external expansion strategy, and profit growth space. Investment points: 1. Steady growth in traditional main business (integrated logistics services) The company started with integrated logistics business. Under the impact of the macroeconomic downturn and increased competition in the logistics industry, the overall profitability of the industry declined. The company withstood systemic risks in the industry through a combination of measures such as strengthening informatization construction, fine management, improving operational efficiency, and developing customers in the new energy market, etc., to withstand systemic risks in the industry and basically maintained steady growth. In the first half of 2016, revenue from integrated logistics services fell only slightly by 1.85% year on year (down 16.65% in the same period last year). 2. Actively adjust the business structure and significantly improve profitability. The company has actively adjusted its business structure, moved from a low margin business to a high margin business, sold 85% of its subsidiary Demaco to cut the scarce profit product sales business (gross profit margin of about 10%), and acquired Bohan Weiye to intervene in the intelligent mobile service business (gross margin level of 50% +). Currently, this business has become the company's main source of profit, and its gross profit share has increased from 43.28% to 53.51% (2016 interim report). The company's overall profitability has improved significantly: net profit of 34.554 million yuan was realized in the first half of 2016, an increase of 127.73% over the same period last year; gross margin increased to 29.04%. 3. Build smart logistics to meet the informatization needs of the entire logistics industry chain Bohan Weiye provides a closed-loop processing plan for the express logistics industry for the entire process of email delivery, delivery information and order placement. It has maintained deep cooperation with China Post Express (EMS), the largest customer, for a long time. The customized smart logistics POSS983 project is expected to maintain a profit growth rate of more than 10% in 2016. 4. The layout of smart medical care. The “mobile nursing station” progressed smoothly. Bohan Weiye developed a “mobile nursing station” system centered on real-time information, and took the lead in cooperating with Sichuan Telecom to quickly enter the mobile medical market in the province. As of April 15, 2015, Sichuan Telecom has signed cooperation agreements with nearly 20 municipal and state pharmaceuticals, with a PDA volume of 3,890 units. We believe that Bohan Weiye has established customer stickiness and obtained massive medical record data resources through early mobile terminal launch, which has a clear first-mover advantage over similar competitors; with the deepening and expansion of the project, there is still considerable room for profit exploration in the future in the direction of mobile doctors, telemedicine systems, cross-hospital electronic medical record platforms, and home care information services. 5. Firmly embarking on the transformation path of industrial mobile informatization (1) Driven by national IoT strategy support and innovative technologies such as wireless communication, the future demand for mobile informatization services in various industries is huge, while enterprise-grade mobile informatization services have great similarity between different industries, and the replicability of similar types of services is strong; (2) Bohan Weiye has accumulated rich experience in large-scale intelligent mobile terminal operation in the fields of smart logistics and smart medical care. The operating model of its smart terminal+software platform is becoming more and more mature. In the future, it can achieve rapid replication and migration between industries, and expand more horizontally The market has expanded the content of more in-depth service projects vertically, seizes opportunities in the multi-industry and multi-scenario mobile informatization layout, and has achieved significant development. 6. Profit forecasts and ratings take into account the steady growth of the integrated logistics service business. The subsidiary Bohan Weiye fulfilled its performance promises in 2016 and 2017, contributing 135 million yuan and 155.5 million yuan in net profit. The estimated operating income of the company in 2016-2017 is 736 million yuan and 774 million yuan respectively, and net profit attributable to the parent company is 141 million yuan and 161 million yuan, respectively, EPS of 0.49 yuan and 0.56 yuan respectively. Corresponding to current stock prices, price-earnings ratios are 57.42 and 50.25 respectively. We are optimistic about the orderly progress of the company's strategy to build a closed-loop supply chain ecosystem and lay out the industrial mobile informatization market. The development of new businesses and new markets is expected to exceed expectations, greatly enhance the company's future performance and valuation, and give it an “increase in holdings” rating. 7. Risks indicate the risk of macroeconomic slowdown and increased industry competition; risk of Bohan Weiye's single major customer; management risk brought about by continuous expansion of business scale; and risk of impairment of goodwill.