Electro-Optical Technology is a leading service provider in China's explosion-proof electrical appliance industry. Its main business is R&D, design, production and sales of explosion-proof electrical equipment for mining, and its main customers are coal manufacturers. The company began deploying the international education sector in 2015, completed a cash acquisition of 65% of Yali Technology's shares, and invested in the Education Industry Fund to incubate education targets. We expect the company's earnings per share for 2016-2018 to be 0.11 yuan, 0.13 yuan, and 0.15 yuan. The initial rating is given a buying rating, and the target price is 22.00 yuan. Key points supporting ratings The downturn in the downstream industry is seeking development, improving customer structure+extension, and expanding the electrical equipment business. Originally, the company's main customers were coal producers. Affected by China's economic slowdown in recent years, the prosperity of the coal industry has continued to decline. In order to cope with market changes, the company has promoted its products to the petrochemical, industrial explosion-proof, and marine fields. The company has obtained general supplier qualifications, and is expected to expand explosion-proof products to the military industry. In August 2015, the company acquired electrical equipment companies Dudley and Taiyida to form a collaboration with the company's original main business, which became the main growth point for the company's performance. With high-end international education as the main line, the industrial chain continues to improve. The company completed the acquisition of 65% of Yali Technology's shares, and the Education Industry Fund has successively invested in 28% of Newban Culture and 8% of Newfield's shares. The internal logic of companies and industrial funds investing in education targets is to continuously improve the international education landscape. Weile Education not only provides curriculum system support for international education, but also effectively forms a front-end entry point for young people. Newfield has a competitive advantage in study tours and post-departure services. Yali Technology uses an asset-light model to carry out international education and training, and provides consultation and intermediary services for studying abroad to B-side and C-side customers. The two-wheel drive of listed companies and industrial funds will work together, and the process of mergers and acquisitions of companies integrating education targets may accelerate. The main risks facing ratings The enrollment situation at international education schools falls short of expectations; the electrical equipment business falls short of expectations. The valuation company's transformation into international education is full of momentum, and the acquisition of 65% of Yali Technology's shares has been implemented, so it can be expected that the pace of expansion will continue in the future. Yali Technology is expected to usher in a significant increase in performance on the basis of expanding school sites and increasing the enrollment scale. The company's earnings per share for 2016-2018 are expected to be 0.11 yuan, 0.13 yuan, and 0.15 yuan. The initial rating is given a buying rating, and the target price is 22.00 yuan.