Event: The company released its 2016 annual report. The company achieved cumulative operating income of 195 million yuan during the period, a year-on-year decrease of 60.42%, net profit attributable to shareholders of listed companies of 76 million yuan, a year-on-year increase of 64.1%; earnings per share of 0.15 yuan, and cash dividends of 0.50 yuan for every 10 shares. Comment: 1. The real estate business is gradually being divested, and the transformation of superalloys is progressing steadily: The company is currently in a period of transformation. Currently, the main source of revenue is still real estate, but it has been gradually divested during the reporting period. The company's strategy to transform superalloys is progressing steadily. In terms of talent, the Wanze Zhongnan Research Institute, which was founded, currently has many of the world's top experts in the field of aero engines. They have all been engaged in R&D and industrialization work for international aero engine companies and their suppliers for a long time, and have also hired experts and scholars from well-known universities in China to participate in project development work or serve as technical consultants; in terms of base construction, the company has set up R&D and engineering centers in Shenzhen and Changsha, and a large number of advanced instruments and equipment imported from Europe, America and other countries have been put into use one after another. At the same time, they have successively prepared projects for implementation in the Shenzhen-Shantou Special Cooperation Zone and Shanghai Industrialization. 2. The development of the superalloy industry will usher in important strategic opportunities. In 2013, the Shenzhen Municipal Government clearly listed the “aerospace materials industry” as a key industry for future development in Shenzhen, and the implementation of major engine projects will also further open up demand for superalloys. The company has received a total of tens of millions of yuan in subsidies from the Shenzhen Municipal Government, and has received government support in Shanghai and Shenzhen-Shantou regions to acquire land at low cost to build production bases. It is expected that the company will continue to receive strong support from governments at all levels in the future. 3. Employee stock ownership plan targets core personnel The company is planning an employee stock ownership plan. The range of holders includes company directors, supervisors, senior management, key employees working for the company and its subsidiaries, and other employees who have been determined by the board of directors to have made outstanding contributions. If implemented successfully, the company will establish a long-term incentive system, lock in core personnel, and fully mobilize the enthusiasm and creativity of employees. 4. The performance forecast predicts that the 2017-2019 EPS will be 0.32, 0.12, and 0.16 yuan, and the corresponding PE will be 48, 129, 97 times, maintaining the “highly recommended” rating. Risk warning: R&D progress is falling short of expectations, and the industrialization process is slow.