Key points of the report describe events Shellett released the 2016 three-quarter report: in January-September, it achieved operating income of 573 million yuan, an increase of 5.31% over the previous year, and net profit attributable to shareholders of listed companies of 37 million yuan, an increase of 11.25% over the previous year; and achieved net profit attributable to shareholders of listed companies of 018 million yuan in the third quarter, an increase of 40.05% over the previous year. Incident review The quarterly revenue fell slightly year on year, and the increase in gross margin led to improved performance. Since this year, with the gradual recovery of the LED market as a whole, while sales volume has increased, competition has also intensified, and the price of LED bulbs has tended to decline. In the third quarter, when drones were not sold on a large scale, the result of a slight year-on-year decline in revenue or an increase in the volume of price declines. The consolidated gross margin rose to 30.5% in the third quarter, the highest in a single quarter in recent years, probably due to product restructuring. Compared to light source products with declining gross margins, the added value of lighting applications and intelligent packaging equipment is higher, or the company's focus is on breakthrough varieties. The company predicts that the full-year profit growth rate will be 0% to 30%, and based on this calculation, it will be -3% -69% for the fourth quarter. Most of this year's profit was contributed by its subsidiary Fushun Optoelectronics, and its product sales are mainly municipal administration, transportation and road construction projects, etc. At the end of the year, inspections will concentrate on confirming revenue and repayment, so the fourth quarter is a critical profit period. Considering the development of new product markets, the annual performance growth rate may be in a high range. With the rapid growth of intelligent packaging and the signing of major orders for charging stations, the company proposed the industrial layout of optical technology applications, consumer electronics, high-end manufacturing, and automotive core components, opening an era of transformation and innovation. Manta Smart S6 makes a brilliant debut. Based on a new chip architecture (not Qualcomm) and independent development of the underlying system and process advantages, the S6 has not only achieved perfect camera functions under a beautiful body, but also expanded more ways to play. The S6 is leading in overall quality and is expected to become the first phenomenal portable drone product. Emerging businesses such as drones are poised to develop, and I am optimistic about the company's medium- to long-term development prospects: building a full range of optical technology applications based on the themes of “light lighting” and “light health”, and brand and sales channel construction is expected to see initial results; collaborating with Fushun Optoelectronics to open up new LED-related application space. Manta, a holding company, has strong research and development capabilities, large R&D investment, and abundant production capacity. The new portable product S6 was released in August, and may become a phenomenal product in the blue ocean selfie market. The development model of “endogenous growth plus extended development” has been established, and it is expected that capital integration will continue to be carried out upstream and downstream of the consumer electronics and new energy vehicle industry chains in the future. Performance forecasts and investment recommendations: Net profit for the years 16 and 17 is expected to be about 0.77 and 111 million yuan, EPS is about 0.21 and 0.30 yuan/share respectively, and corresponding PE is 73 and 50 times, respectively, maintaining the “buy” rating.