Event description Ruihe Co., Ltd. released its 2016 quarterly report. In the first quarter, it achieved operating income of 518 million yuan, a year-on-year increase of 27.35%, a gross profit margin of 14.29%, a year-on-year decrease of 0.04%, and a net profit attributable to owners of the parent company of 225 million yuan, an increase of 33.74% over the previous year, and an EPS of 0.21 yuan in the first quarter. Incident review The net profit attributable to the first quarter rose year on year: In the first quarter of 2016, the company continued to explore the market, and the volume of business orders increased steadily, resulting in a 27.35% year-on-year increase in operating income and a slight decrease in gross margin of 0.04% in the first quarter. Among the three expenses, financial expenses increased significantly, by 165.67%, mainly due to an increase in interest paid on short-term loans; in addition, the increase in impairment preparations for accrued accounts receivable increased asset impairment losses by 0.3 billion yuan in the current period compared to the previous period. In addition, investment income from corporate joint ventures increased by 0.3 billion yuan, and net attributable profit increased by 33.74% year on year due to various factors. Due to the increase in the company's main business, and the photovoltaic business connected to the grid for power generation, the expected benefits will be obtained. The company's 2016 H1 EPS is expected to be 0.41 to 0.51 yuan; the 2016Q2 EPS is 0.21 to 0.30 yuan. Decoration orders continue, and the leading position remains the same: the company is one of the leading enterprises in China's public building decoration industry. Against the backdrop of the macroeconomic downturn and the downturn in the construction industry, the company has maintained steady growth in performance. The company continued to increase the number of decoration orders in the first quarter. In February, it received renovation project contracts signed with Huafu Real Estate, Dalian Shicheng, and Evergrande Mingdu, with a project value of 165 million yuan. Benefiting from the government's inventory removal policy, the company will continue to enjoy policy dividends as a listed decoration company with strong comprehensive strength and rich experience in public and hardcover decoration. Accelerate strategic transformation and lay out the photovoltaic industry: The company strives to achieve high-tech transformation. In the context of the broad development prospects of the photovoltaic industry, the company decided to increase the share of the photovoltaic business in the main business. In January, the company decided to increase the capital of Credit Suisse New Energy to invest in photovoltaic power generation projects. Credit Suisse Renewable Energy has received a 30MWP agricultural and photovoltaic complementary photovoltaic power generation project in Zhengping Town, Xinfeng County, with a static total investment of about 2475 million yuan. After this investment is completed, the scale of the company's photovoltaic industry operations will be further expanded. It is estimated that the company's EPS in 2016 and 2017 will be 0.60 yuan and 0.69 yuan respectively, and the corresponding PE will be 64 and 55 times, respectively, giving it a “buy” rating.