Incident: On August 17, the company released the “2016 Semi-Annual Report”. The announcement stated that operating income, net profit attributable to shareholders of listed companies, and net profit attributable to shareholders of listed companies after deducting non-recurring profit and loss were 375 million, 443.9 million and 403 million yuan respectively, up 106.28% from the previous year, reversing losses. At the same time, it is predicted that the January-September performance was 62-70 million yuan, up 259.23%-305.59% year on year. Comment: UHV construction is beneficial to the insulator industry. 2016 marks the beginning of the country's 13th Five-Year Plan. The outline of China's “13th Five-Year Plan” indicates that in addition to the 12 transmission channels for air pollution prevention and control, power transmission channels for southwest, northwest China, and northeast China will be built to achieve coordinated development of power grids at all levels. Under implementation, the State Grid Corporation plans to invest 2.7 trillion yuan to build simultaneous power grids in the east and west by 2020, complete 22 UHV AC and 19 DC projects, and accelerate the upgrading of distribution grids. The above shows that the overall amount of investment in power grid construction will increase in the next five years, and the investment allocation is leaning towards intelligence and high grade. Electrical equipment companies are facing difficult market opportunities, and the insulator industry is still in a period of significant strategic opportunity. Meanwhile, as a leading enterprise in the insulator industry, Dalian Electric Porcelain will fully benefit from the market opportunities brought about by UHV construction. Sales of suspended porcelain insulators and composite insulators have doubled, which strongly guarantees high performance growth. Suspended porcelain insulators have established high technical and financial barriers for the industry due to their complex production process and huge investment, while the entry threshold for the UHV sector is higher; therefore, competition in the high-end market for suspended porcelain insulators, especially the UHV market, will remain relatively stable for a long time to come. With the rapid development of national power construction sites and the rapid rise of glass and composite insulators manufacturers, a three-tier competitive pattern for porcelain insulators, glass insulators, and composite insulators has now been formed. Currently, there are only four high-end ones, and the industry standards are high. Judging from the winning bid situation, Dalian Electric Porcelain has always been in a leading position. In the first half of 2016, revenue from suspended porcelain insulators and composite insulators increased by 179.5% and 369.09%, respectively, and gross profit increased by 7.99% and 7.2%, respectively. By region, domestic sales increased 114.78% year on year, gross margin increased 11.55% year on year, foreign sales increased 87.62% year on year, and gross profit increased 5.64%, which positively guaranteed high performance growth. The increase in the number of bids won by the State Grid is beneficial to guarantee performance throughout the year. Judging from the winning bid situation that has been announced, it won the bid of 274.7 million yuan in the first half of 2016, accounting for 92.4% of the winning bid volume announced for the full year of 2015. It has already exceeded the number of successful bids announced for the full year of 2014, and the winning bid volume will gradually release results in 2016 and 2017. Profit forecast. In the context of the continuous release of UHV construction, the company's business scale continues to expand, which is expected to usher in sustainable growth. The forecast is that the company's 2016-2018 EPS will be 0.46, 0.55, and 0.67, respectively, and continue to give the “buy” rating. Risk suggests UHV construction falls short of expectations