According to recent industry news, the environment faced by JuTeng International [3336.HK] is turning positive, which supports our earlier view that the company has begun to recover after recording weak mid-term results in 2016. JuTeng's management confirmed that the company's operating performance is continuing to improve, and they also reiterated the guidelines given during the interim results conference. We also believe that in addition to 2-in-1 laptop cases, JuTeng International will infiltrate the metal case market for other products to drive growth. Other products include PCs and televisions. Since JuTeng International issued a profit warning in mid-July 2016, shares have been under heavy selling pressure. The company's low base for the first half of 2016 is expected to ensure month-on-month and year-over-year growth in the second half of 2016 and the first half of 2017. After the company recorded weak 2016 interim results, management is inclined to wait for more data points to confirm the trend. But our view has become more positive, and we believe the worst is over and the market has reset its expectations. As industry news became positive and market attention to the sector increased, the stock prices of some of JuTeng International's peers such as Kecheng, Guangda, and Invada have rebounded. If the market's sentiment towards Juteng International improves, it will boost stock price performance. Maintaining the buy rating, the target price is HK$3.25, based on 7.0 times the 2016 price-earnings ratio. Our target price-earnings ratio is discounted to the industry average, but similar to the company's historical average. Investment highlights and positive industry news. According to DigiTimes.com, some laptop-related components, such as TFT-LCD panels, batteries, and solid-state drives, have recently been in short supply due to higher-than-expected orders from laptop companies such as HP and Dell. Some laptop manufacturers, including HP and Dell, recently raised their laptop shipment forecasts for the second half of 2016 and the first half of 2017. According to the article, the expected strong demand is due to lower channel inventory, Intel's introduction of new processors, and increased market acceptance of Windows 10. JP also raised its guidance for the first quarter of fiscal year 2017. JP also pointed out that judging from the current product roadmap, the utilization rate of its CNC production capacity will improve in the next few years, which will help partially eliminate concerns about overcapacity caused by the market's gradual adoption of glass cases. JuTeng's management said that due to technical issues, laptop cases may be made of materials such as glass and ceramics in the future. The contribution of the Metal Case segment continues to increase, which will have a positive impact on the company's profitability. Management maintains previous guidance for the second half of 2016. Management maintained its guidance for the second half of 2016 in the 2016 Interim Results Conference. The company anticipates that seasonal effects and the introduction of new products will drive revenue growth of 10% to 15% month-on-month. JuTeng International's 2016 interim results were affected by a key customer's delay in product launch. Management believes that the customer's new product launch will go smoothly. The company's gross margin is expected to rebound to 15% to 20%. We believe that JuTeng International's performance in the second half of 2016 is on the path of recovery, and we also believe that the extremely low base for the first half of 2016 should ensure a month-on-month and year-over-year increase in revenue and net profit for the second half of 2016 and the first half of 2017. Focus on the PC business. Management still anticipates that the primary applications for its products will continue to be laptops and tablets. Currently, the smartphone market has limited momentum to bring growth to Juteng International.