Incident: The company released its report for the third quarter of 2016. The first half of the year achieved operating income of 554 million yuan, an increase of 47.53% over the previous year, and net profit attributable to shareholders of listed companies of 125 million yuan, an increase of 736% over the previous year, with basic earnings of 0.27 yuan per share. Key investment points: Higher prices for VB2 and VB6 led to significant growth in performance. The third quarter achieved net profit of 68 million yuan in a single quarter, surpassing the net profit of 59 million in the first half of the year. The reason for the sharp increase in performance was mainly due to the sharp rise in VB2 and VB6 prices and the decline in the price of raw corn. Currently, the transaction price in the VB2 price market is around 280 yuan/kg. Major manufacturers agree to limit price increases, and prices are stable. The transaction price of VB6 in the market is 240 yuan/kg, and the price is stable. Although the subsidiary Huisheng (production of VB6) has stopped production and maintenance for 3 months since July, the company has made production and sales arrangements and inventory preparations, and the suspension of production has had no impact on the company's performance. Currently, the price of new corn is 1,600 yuan/ton, and the price of imported corn to Hong Kong is reversed by 1,500 yuan/ton. Domestic corn prices are expected to drop further and continue to increase gross profit margins. The reform process of state-owned enterprises in Hubei Province is being accelerated, and the company is expected to become the next target of Hubei state-owned enterprise reform. The reform of state-owned enterprises in Hubei Province is gradually being implemented. Chutian Express, one of the listed platforms of the State Assets Administration Commission, was approved by the Provincial State-owned Assets Administration Commission in August. In September, Xiangyang Bearing issued an indicative announcement on mixed reform for the controlling shareholder. The company is the only listed company under the Changtou Group. When it entered Guangji Pharmaceutical, Changtou Group promised that it would take Guangji Pharmaceutical's existing business and products as the core, actively invest in the development and expansion of Guangji Pharmaceutical's existing business and products, and introduce new products as appropriate. The Changtou Group is expected to take advantage of this state-owned enterprise reform opportunity to better play the role of a platform for Guangji Pharmaceutical's listed companies. Guangji Pharmaceutical's national reform expectations, which also belong to the Provincial State-owned Assets Administration Commission, are strong. Profit forecast and investment rating: The company's VB2 accounts for more than 50% of global production capacity. The company currently adopts a controlled price increase policy. Other major manufacturers agree to limit price increases. VB2 prices are stable, and performance is supported. Currently, the company's market value is around 5 billion dollars, which is expected to benefit from Hubei's state-owned enterprise reform and further open up the company's valuation space. We expect the company's 2016-2018 EPS to be 1.07, 1.17, and 2.00 yuan, respectively, maintaining a “buy” rating. Risk warning: Vitamin price increases are uncertain, and the progress of state-owned enterprise reforms has fallen short of expectations.