Huangshi Group achieved net profit of 133 million yuan in the first three quarters of 2016, which is close to the upper limit of the semi-annual report for performance guidance. The company achieved revenue of 1,595 billion yuan in the first three quarters, an increase of 52.18% over the previous year. Net profit attributable to shareholders of listed companies was 133 million yuan, an increase of 76.38% over the previous year. In the 16Q3 single quarter, the company achieved revenue of 490 million yuan, a year-on-year increase of 30.8%, and net profit of 31.73 million yuan, an increase of 70.5% over the previous year. The year-on-year increase in the company's performance was mainly due to Shengshi Hotsun and Perfect Online Merger. According to the three-quarter report, the company is expected to achieve net profit of 2.7 to 332 million yuan for the full year of 2016, an increase of 50%-80% over the previous year. The company's main businesses, dairy and culture, are operating steadily. The company's gross margin for the 16Q1-16Q3 single quarter was 26.0%, 33.7%, and 36.4%, respectively. The gross margin for the single quarter increased quarterly. The overall gross profit margin for the first three quarters was 32.29%, a slight decrease of 0.97 percentage points from the previous year; the expense ratio for the first three quarters was 20.64%, down 1.82 percentage points from the previous year. The company has joined hands with industry giants to actively develop a layout around the children's ecosystem. From the end of August to September, the company strategically cooperated with Global Zhida, Qihu Technology, Sando Culture, and New Oriental Express to open up business space in various fields such as children's smart terminals, children's Internet platforms, children's 3D content, and children's preschool education products based on the company's massive children's animation and preschool education content, new media distribution channels covering the whole country, and television broadcasting platforms in various cities and counties. Investment advice. We expect the company to achieve net profit of 303 million, 505 million, and 650 million in 16-18, an increase of 64.33%, 66.55%, and 28.69% over the previous year; considering the gradual maturation of the child ecosystem and space for extension in the future, it is expected that 2017 will continue to improve exam preparation performance. The mid-tier target market value was given at 21 billion yuan, corresponding to the target price of 25.06 yuan, maintaining the purchase rating. Risk warning. Extension integration falls short of expectations, dairy industry growth slows down, film and television culture industry regulatory risks