Report summary: The company is deeply involved in the dairy packaging machinery industry. Major customers include Mengniu Dairy, Yili Group, **** Dairy, Danone Group, and Huishan Dairy. In 2013, 2014 and 2015, the total sales revenue of the company's dairy customers was 330 million yuan, 450 million yuan and 500 million yuan respectively, accounting for 88%, 88% and 86% of the main business revenue, respectively. The dairy and beverage packaging industry will maintain steady growth. According to the Freedonia report, China's total demand for dairy and beverage packaging machinery is predicted to have a compound annual growth rate of 11.74% from 2001 to 2021. The total demand for dairy and beverage packaging machinery is expected to reach 8.240 billion yuan in 2016, of which the demand for dairy packaging machinery is 2.4 billion yuan. The company's dairy packaging machinery market share ranks first among domestic peers. Compared with foreign competitors, the company's products have a high cost performance advantage. The technical level and quality of the company's products are the same or close to similar foreign products, and the price has a price advantage of 30%-40% compared with similar products from advanced foreign companies. The company actively extends downstream of the industrial chain. The company has established 4 satellite factories, focusing on corresponding plants such as Mengniu and Yili. In 2015, the company's plastic products revenue exceeded 100 million yuan, accounting for nearly 20% of the main revenue. The company diversifies downstream customers. In 2016, on the basis of consolidating existing customers, customers in the dairy, healthcare, alcohol and other industries were expanded, and orders from new customers such as Tomson Beijian, Hengrui Pharmaceutical, and Hengshun Liquor were added. Orders from new customers such as Tomson Beijian, Hengrui Pharmaceutical, and Hengshun Liquor have been added. Company profit forecast and investment rating: We expect the company's revenue for 2016-2018 to be $6.93, 8.25, and 990 million yuan, respectively, and EPS of 0.68, 0.80 and 0.92 yuan, respectively, corresponding PE of 56/48/42 times. Consider that the company is a leader in intelligent packaging machinery. According to 70 times PE in 2016, we gave the company a target price of 47.60 yuan for 6 months, and there is room for a 25% increase compared to the current price. First coverage, giving the company a “recommended” rating.