Event: On October 26, 2016, the company released its report for the third quarter of 2016. The first three quarters achieved operating income of 294 million yuan, a year-on-year increase of 44.13%; realized net profit of 64.01 million yuan, a year-on-year increase of 62.74%; and achieved earnings per share of 0.38 yuan, an increase of 22.58% over the same period last year. Steady increase in performance and increased profitability: The achievement of operating results for this quarter was due, firstly, to sales of the new product Oriz, which sold about 90 tons of Oriz this season and contributed about 6 million yuan in profit; secondly, the increase in operating income during the reporting period was due to the inclusion of the three subsidiaries (Heer Medical, Sanji Biotech, and Jingneng Biotech) in the scope of the consolidated report. In the first three quarters, the company's gross margin was 45.38%, an increase of 4.96pp, and net profit margin was 21.75%, an increase of 2.49pp, indicating that the company's profitability was further strengthened. Domestic and foreign mergers and acquisitions to accelerate new business development: On July 8, 2016, the company's board of directors and shareholders' meeting deliberated and passed the “Proposal on Foreign Investment of Subsidiaries”. Sanji Biotech, a subsidiary of the company, invested 14.76 million yuan to acquire 73.8% of Suzhou Dongsheng's shares. Suzhou Dongsheng is engaged in the production and service of PCR instruments and is in a leading position among domestic suppliers. The combination of the two is conducive to Sanji Biotech's business integration, providing new products and reducing original service costs, forming a new core competitive advantage, leveraging synergies, and further enhancing Sanji Biotech's sustainable development capabilities. On July 15, 2016, the company's board of directors deliberated and passed the “Proposal on Overseas Investment”. The company used its own capital of 17.7533 million yuan to subscribe for 31.92% of the shares of the Swedish company NeoDynamicSAB, becoming its largest shareholder. The company will actively use NeoDynamicSAB's advanced NeoNavia biopsy system to actively promote the development of this business, further consolidate the company's “health care service” platform development foundation, and thus achieve the company's strategic goal of long-term sustainable development. Participation in major national precision medicine projects: Sanji Biotech, a wholly-owned subsidiary of the company, and Peking University and five organizations including Peking University participated in the National Key Research and Development Program's precision medicine research project “Pharmacogenomics and the Comprehensive Evaluation System for Accurate Drug Use in China”. In order to better complete this special task, the company plans to increase capital and establish Beijing New Open Source Precision Medical Technology Co., Ltd. to cooperate with the implementation of the project. The joint collaboration between the two companies will enable the new open source to open up the entire industry chain of precision medicine research, from laboratories to hospitals to pharmaceutical companies. At the same time, this foreign investment also directly promotes the development of the company's precision medicine platform, further enhances Sanji Biotech's brand awareness and enhances the company's overall profitability, and has a positive impact on the company's future revenue and profit growth, in line with the company's long-term development strategy. Profit forecast and investment rating: We forecast that the 2016-2018 operating income of New Open Source (300109) will be 449 million, 575 million and 725 million yuan respectively, and net profit attributable to the parent company will be 111 million, 160 million yuan and 208 million yuan; equivalent to 2016-2018 EPS of 0.65 yuan, 0.94 yuan, and 1.22 yuan respectively; corresponding PE is 83, 57 and 44 times, respectively. For the first time, we have given an “Overweight” rating. Risk warning: environmental risks, new product development risks, increased market competition risks, and overseas investment risks.