Key Investment Companies released the 2016 interim report: In the first half of 2016, the company achieved operating income of 165 million yuan, an increase of 1.49% over the previous year; realized net profit attributable to shareholders of listed companies of 1998872 million yuan, a year-on-year decrease of 8.78%, and achieved basic earnings per share of 0.12 yuan. The main business grew steadily: In the first half of 2016, the company's operating income maintained steady growth. Among them, subway products, tunnel products, civil and industrial products increased -25.78%, 422.91%, and 83.03% year-on-year respectively; subway product revenue declined year-on-year, mainly due to the high base in the same period last year, while tunnel products achieved significant growth. Overall, the company's operating income has maintained steady growth, and subway and tunnel products are an important pillar of the company's stable revenue. There has been a steady increase in gross margin. In the first half of 2016, the comprehensive gross margin of the company's products increased 1.5 percentage points year-on-year to 41.7%. Among them, the gross margins of subway products, tunnel products, and civil and industrial products were 41.61%, 41.53%, and 40.80%, respectively, up 2.97, 7.58, and -1.63 percentage points year-on-year. Since the company's products are positioned as high-end ventilation equipment, the market pattern is relatively stable, and customers value the brand and reliability of the products more, so the company's gross margin has always remained at a high level. The share of accounts receivable remains high. As of the end of June 2016, the company's accounts receivable balance was about 512 million yuan, accounting for 59% and 92% of the company's total assets and net assets respectively; large accounts receivable dragged down the company's performance. The company added about 13.6 million yuan in bad debt preparations in the first half of 2016, accounting for 68% of net profit, which also led to poor cash flow performance from the company's operating activities. Profit forecast and investment advice: We expect the company's EPS from 2016 to 2018 to be 0.34 yuan, 0.41 yuan, and 0.49 yuan, respectively. The company is a leading enterprise in the field of subway and tunnel ventilation in China, and is actively exploring the “second main business”. Maintain the “Overweight” rating. Risk warning: Risk of bad debts on accounts receivable; subway construction progress is lower than expected.