The company is the world's leading manufacturer of yarn-dyed fabrics, and has performed well in the third quarter of this year. The company has an integrated upstream and downstream industrial chain for embossing, spinning, yarn dyeing, weaving, finishing, knitting, home textiles, printing and dyeing, clothing, etc., and also has thermoelectric and sewage treatment facilities. It has strong cost advantages and strong resilience to risks. As of the third quarter, the company's revenue was 2,724 million yuan, up 3.78% from the same period, and net profit to mother was 236 million yuan, up 32.69% over the same period, and is expected to increase 15% to 35% for the whole year. Deeply cultivate the industrial chain and actively lay out overseas production capacity. The company currently has a production capacity of 210,000 tons of cotton yarn, 160 million meters of yarn-dyed cloth (second only Lutai), 60 million meters of printed and dyed cloth, 11 million pieces of shirts, 6,000 tons of knitted yarn and knitted cloth each, and 30 million meters of home textile fabrics. Yarn-dyed cloth, printed cloth, and shirts contribute 90% of the company's profits. In the short term, it is expected that next year, the production capacity of dyed cloth will remain stable, and the production capacity of printed cloth and shirts will expand by about 10-20% and 20%, respectively. In the long run, the company is actively deploying production capacity in Africa, which enjoys low labor and preferential tax policies. Lay out the environmental protection field to form a new growth point for future performance. The company acquired the remaining 40% of the shares of the subsidiary Lianfa Environmental Protection and New Energy Company (Lianfa Thermal Power) last year. After years of operation, the subsidiary has good technology and experience in electricity, steam, hot water, compressed air, river water treatment and sewage treatment, and already has good profitability. The additional 40% of the shares can contribute an additional 2 million to the company's net profit level every month in the first three quarters of 2016. At the same time, the company is also considering actively expanding related projects in the field of environmental protection in the future. The company's new management has expectations for transformation. Post-80s Kong Lingguo and Jiang Bo, who have investment backgrounds in the financial industry, joined management and injected new strength. At the same time, the company established a new investment company last year, and performance growth has been steady over the years, and the cash flow situation is good. As of the third quarter, the cash assets on the company's account reached 1.26 billion yuan, providing sufficient financial support for the company's future mergers and acquisitions transformation. We believe that the company is operating steadily and is expected to transform through epitaxial mergers and acquisitions. EPS is expected to be 1.13 yuan, 1.20 yuan, and 1.30 yuan respectively in 2016-2018. The corresponding PE is 16X, 15X, and 14X, which is covered for the first time to give an “added” rating. Risk warning: downstream demand falls short of expectations; risk of cotton price fluctuations; risk of exchange rate fluctuations.