Incident: On October 25, 2016, Sichuan University Zhisheng released its report for the third quarter of 2016, and the company's performance was good. From January to September, the company achieved a total operating income of 205 million yuan, an increase of 55.20% over the previous year; net profit attributable to shareholders of listed companies was 206.758 million yuan, an increase of 5.98% year on year; net profit to mother after deducting non-recurring profit and loss was 178.45 million yuan, an increase of 10.56% year on year. Comment: Revenue growth has slowed, and gross margin has risen slightly. Compared with the 72.54% revenue growth rate in the company's semi-annual report, the revenue growth rate for the first three quarters decreased by 17.34 percentage points, mainly due to the year-on-year decline in revenue growth in the third quarter. The company's gross margin for the first three quarters was 29.54%, up 2.69 percentage points from the 26.85% disclosed in the semi-annual report. Considering that the “information technology and other products and services” business with low gross margin accounted for a relatively large share of revenue in the third quarter, the “aviation and air traffic control products and services” business with a high gross margin increased dramatically this year, but confirmed revenue for the current period was low. In the future, with the gradual confirmation of revenue from high-margin projects, the company's overall profit level will increase. The company disclosed that the year-on-year change in net profit due to mother in 2016 is expected to be between 15% and 35%, and the performance will maintain steady development. Actively promote new industries and increase video big data. The company actively promotes emerging businesses represented by face recognition and virtual reality. In the field of face recognition, the principle prototype and application prototype of the high-precision 3D full-face camera developed by the company have been completed, and the depth measurement accuracy of human face details has reached 0.1 mm. With the company's 3D recognition software, it can achieve a recognition accuracy rate of over 99.5% and strong anti-counterfeiting capabilities, and the technical level is internationally leading. At the beginning of September, Sichuan Dazhisheng and Jiadu Technology purchased part of Suzhou Qianshitong's shares as joint buyers. After the completion of this foreign investment, the company will acquire 10.90% of Suzhou Qianshitong's shares. Suzhou Qianshitong has long been deeply involved in the field of video big data. It has a research team composed of experts in the field of graphics, and has received many national and provincial science and technology progress awards. Qianshitong's intelligent video search technology can be combined with the company's existing face recognition and vehicle recognition technology to form competitive products and help accelerate the company's urban intelligence system business layout. Profit forecast and rating: We expect the company's operating income from 2016 to 2018 to be 340 million yuan, 442 million yuan and 574 million yuan respectively, and net profit attributable to the parent company will be 46.595 million yuan, 53.573 million yuan, and 656.18 million yuan respectively. Based on the latest share capital, the earnings per share will be 0.21 yuan, 0.24 yuan, and 0.29 yuan respectively. The PE corresponding to the latest stock price is 151 times, 131 times, and 107 times, respectively. Maintain a “hold” rating. Risk factors: The industrialization process of new businesses is blocked; competition in the fields of face recognition and virtual reality is intensifying.