Investment Summary

Due to the integration of M&A business, the company`s result in 2016 is below expectation, but that in 2017 is beyond expectation. Although the new business of M&A is still in the integration period, the company is expected to upgrade itself from supplier of individual components to system integrator of products integrating software and hardware, creating a distinctive service model of supply chain and becoming the leader in the segment industry.

We reaffirm a target price of RMB 40.5 equivalent to 30 of 2017`s estimated P/E ratio and 26 of 2018`s, respectively, and assign BUY ratings. (Closing price as at 15 Aug 2017)