Event: In the first three quarters of 2016, the company achieved operating income of 1,693 billion yuan (+11.39%), net profit attributable to the parent company of 66.2 million yuan (+14.09%), deducted non-net profit of 56.79 million yuan (+23.14%), and net cash flow from operating activities of 89.12 million yuan (236.71%). Among them, Q3 had revenue of 587 million yuan (+10.65%), net profit of 25.7 million yuan (+20.28%), net profit of net income of 21.55 million yuan (+24.80%) after deducting non-net profit of RMB 21.55 million (+24.80%). The company expects the net profit attributable to the parent company to vary between 5842-87.63 million yuan in 2016, an increase of 0% to 50% over the previous year. Thanks to the increase in revenue from clothing and silk products, the company's sales revenue growth rate began to pick up in the first quarter of this year, maintaining a growth rate of more than 10%. At the same time, the company strengthened the integration of supply chain management and sales channels, strictly controlled costs and expenses, increased investment in production automation, and improved operational efficiency. Compared with the same period last year, the company's gross margin in the first three quarters increased by 0.46 percentage points, the management expense ratio decreased by 0.77 percentage points, and the company's inventory turnover and accounts receivable turnover levels also increased to a certain extent. The company announced a fixed increase plan in September. It plans to issue no more than 56.5 million shares without public offering at a price of no less than 7.34 yuan/share and raise no more than 396 million yuan for smart factory integration and foreign trade integrated service platform projects, private brand marketing channel intelligent upgrading projects, and warehousing and logistics base projects. This fixed increase plan will effectively implement the company's intelligent upgrading and improve production and operation efficiency; at the same time, as the largest cocoon silk production base in Guangxi and the whole country, Yizhou has gathered many participants in the cocoon silk industry. The establishment of a warehousing and logistics base for silk cocoon raw materials will effectively expand the company's control and influence in raw material production areas in the central and western regions, leading to an increase in supply chain business scope and revenue. The company announced in August that it plans to invest 11.74 million yuan to acquire 10.5% of the shares of “Zhejiang Golden Silkworm Net Supply Chain Management Company” held by Shengxin Industrial. After the transaction was completed, the shareholding ratio rose to 80.75%. The supply chain company is the operator of the authoritative B2B trading platform “Golden Silkworm Network” in the cocoon silk industry. The annual turnover of Silkworm Net is about 8 billion yuan, and there are more than 2,000 instant information users. The “Jiaxing Index” formed by it is a trend indicator of international cocoon silk prices. Along with the construction of the Guangxi warehousing and logistics base and distribution transfer warehouse in Jiaxing, the golden silkworm net will assist the golden silkworm net to form a supply chain warehousing logistics system covering the Guangxi cocoon silk raw material base and the entire Zhejiang product deep processing industry. Supply chain management and value-added services including supply chain yard supervision, trade, finance and business consulting can also be further developed. The company's main business has strong brand advantages and industrial chain integration advantages. We are optimistic that the company will achieve cost control and efficiency improvement through intelligent upgrading on the basis of the steady development of its main business. At the same time, it is optimistic that the Golden Silkworm Network will use the establishment of a storage base in Guangxi to carry out a series of value-added services for industrial integration and performance growth. The company is expected to achieve net profit attributable to the parent company of 7406, 9068 and 98.26 million yuan in 2016-2018, with a year-on-year increase of 26.76%, 22.45% and 8.36%, corresponding to the 16-18 EPS of 0.14, 0.17 and 0.19 yuan/share. Referring to related comparable companies, the price-earnings ratio in 2017 was between 31X-87X, giving the company 55XPE in 2017, corresponding to a target price of 9.35 yuan/share, and an increase in holdings rating. Main uncertainties: The fixed increase project has not yet been approved by the Securities Regulatory Commission, demand is sluggish, and exports are declining.