The company released its 2016 annual report. Annual revenue was 1.51 billion yuan, up 57% year on year, and net profit was 160 million yuan, up 52% year on year. At the same time, the company released a performance forecast for the first quarter of 2017. At the same time, the company released a performance forecast for the first quarter of 2017. Net profit increased 15%-45% year on year (0.33 to 42 billion yuan), in line with our expectations. The core view is that the financial situation is healthy: The company's revenue in 4Q16 reached 450 million yuan, an increase of 67% over the previous year, further strengthening its leading position in the domestic backlight LED industry. The company's capital expenditure in 4Q16 remained at a high level of nearly 80 million yuan, indicating confidence in demand. The per capita output value in 2016 was 880,000 yuan, up 12% from 790,000 yuan in 2015, and is at a very high level in the electronics industry. The company has invested in robotic automated production lines to achieve fully automatic and intelligent production, and the per capita output value will continue to increase. The main LED business continues to grow at a high rate: 1) The market size of medium to large backlight LEDs has reached 20 billion yuan. Currently, the main suppliers are ****, South Korean, and Japanese companies such as Yiguang, Seoul Semiconductor, and Toyota Gosei. Televisions, LCD panels, and backlight modules have all been localized, and the localization of LED devices will usher in rapid development in the next 4-5 years. Jufei, as the absolute leader in LED backlighting in China, will be the biggest beneficiary of this trend. 2) Last year, the company obtained a patent license from Toyoda Gosei, and orders from overseas customers will reap benefits. According to media reports, major overseas tablet makers are also seeking supply chain opportunities for backlighting LEDs in China. 3) The mobile phone market space has increased several times: The iPhone 7 is leading the four-flash trend and will spawn new growth points. According to media reports, the iPhone 8 is expected to use a 3D camera, and the infrared sensor is expected to gain new applications. The company will become a giant in optical chip packaging: there is a big difference between optoelectronic chips and microelectronic chips, and the packaging accuracy requirements for optical devices are also far higher than those for microelectronic devices. Driven by optical communications, data centers, and terminal products, optical devices will experience three growth opportunities, and the optical device market is expected to reach 12.3 billion US dollars in 2020. Jufei's 2.5G coaxial optical devices (which can be used for 10G modules) have been supplied in small quantities to domestic optical component manufacturers, and 10G devices (for 40G modules) are in the sample production stage. ZTE is vigorously deploying the optoelectronic industry, and Jufei is expected to use ZTE to grow into a domestic optical-chip packaging giant. Financial forecasts and investment recommendations We forecast the company's EPS for 2017-19 to be 0.31, 0.42, and 0.51 yuan respectively. According to comparable companies, the company was valued 41 times in 2017, and the corresponding target price was 12.7 yuan, maintaining the buying rating. The risk indicates that the optical chip business is not progressing smoothly; there is a risk that backlight LED devices will not develop as expected.