Event: Invest in the establishment of Taocai Cat to lay out the “last mile” of food distribution traceability. On July 20, 2016, Information Development issued an announcement stating that Guangdian Information Development Co., Ltd., a wholly-owned subsidiary of the company, plans to invest 50 million yuan with actual controller Zhang Shuhua and Shanghai CITIC Electronics Development Co., Ltd. and major shareholder Shanghai CITIC Electronics Development Co., Ltd. to establish Taocaimao Information Development Co., Ltd. with investment ratios of 20%, 60% and 20%, respectively. TaocaiMao focuses on the most important terminal scenario for food distribution - the vegetable market. It strives to achieve accurate “last mile” traceability of agricultural products by building a third-party O2O trading service platform serving vegetable markets and vegetable merchants, and open up the circulation traceability and “last mile” traceability information chain. Comment: Expand the traceability industry chain and lay out downstream consumption scenarios in the distribution traceability industry. Food traceability mainly includes three links: production, distribution, and consumption. Information development is the leading food traceability in China. Its Guangdian traceability products have set up a platform-level distribution traceability system in the distribution field for departments including the Ministry of Commerce and the Food and Drug Administration, which can complete large-scale circulation traceability of food and drugs such as pork and Chinese herbal medicines. This investment to establish TaocaiMao is an important step for the company to build a traceability system for the entire process from production to the dining table, on the basis of completing the traceability of midstream distribution and connecting to the “last mile” of circulation, that is, the final consumption scenario of consumers. TOG is gradually moving towards TOBTOC to create a comprehensive, three-dimensional food distribution traceability big data platform. Currently, the food traceability business form for information development mainly involves undertaking government construction projects. On the one hand, the government-led distribution chain traceability platform is the most important intermediate link connecting production and consumption, providing the company with a huge card position advantage in arranging food traceability, but at the same time, the revenue structure, which mainly focuses on government project construction, has also caused disadvantages such as a single business model and large revenue fluctuations. Information development now has a downstream B-end and C-side layout to create a third-party traceable O2O trading platform, which will help it expand its business model, improve its revenue structure, and use the platform's advantages to provide multiple revenue models such as traffic monetization and big data applications. At the same time, we believe that in the future, the company will further extend the traceability system to the upstream production field to achieve traceability of service circulation throughout the industry chain. Core investment logic: Here, we once again emphasize the core logic of information development, that is, “one arrow, two wings” to create experts in information resource management. “One arrow”: A national strategy to improve food safety, and the food distribution traceability industry is in an explosive window period. The company has taken the lead with its card slot advantage, and the “13th Five-Year Plan” period will usher in huge growth opportunities; “Two wings”: the company is in a leading position in archives and prison informatization. Currently, there are opportunities for deep cultivation in both markets, which can provide a continuous source of profit and valuation support for the company's growth. For the detailed logic of industry and company development, please refer to “Food Traceability: The 13th Five-Year Plan” Ushers in a Policy Inflection Point, and the Ten Billion Market Seeks Industry Leaders” and “Information Development (300469.SZ) - Two Wings with One Shot to Build Information Resource Management Experts”. Profit forecast and investment recommendations: We predict that the company will achieve operating income of 5.73, 7.04, and 864 million yuan in 2016-2018, up 31.0%, 22.8%%, and 22.7% year on year; achieve net profit attributable to the parent company of 5,252, 7,106, and 92.03 million yuan, up 27.60%, 39.83%, and 31.15% year on year. We expect the company to achieve diluted EPS of 0.79, 1.06, and 1.38 yuan respectively in 2015-2017. Considering the “13th Five-Year Plan” policy support for food traceability, file informatization, and political and legal informatization, and the company's position and card position advantages in various segments, the company's performance growth is extremely flexible. The company's market value within the next 6-12 months is 10 billion yuan, and the corresponding target price is 150 yuan, giving it a “buy” rating. Risk warning: 1) stock market systemic risk; 2) product innovation risk; 3) risk of policy implementation falling short of expectations