Core view: The company announced the 2016 performance report, with annual revenue of 2,049 billion yuan, a year-on-year increase of 8.54%, and net profit of 183 million yuan, an increase of 10.77% year-on-year. Among them, quarterly revenue for the fourth quarter increased 11.38% year-on-year, and net profit increased by 988.73%, which is further faster than the previous three quarters. The sharp increase in net profit for a single quarter in the fourth quarter was mainly due to, on the one hand, the negative base for the same period last year, the overall economic downturn in 2015, and revenue growth in the fourth quarter was lower than expected. At the same time, e-commerce and distribution grew faster in 2015, but the gross margin of e-commerce and distribution was relatively low, so overall gross margin decreased slightly. On the other hand, the company strengthened effective control of costs and expenses in 2016. The company's leading advantage is further highlighted. Judging from the situation of domestic high-end underwear companies that have announced their results, the company's performance is steady and superior to its peers. We think it is mainly due to the fact that the company has always been very cautious in channel expansion and has paid more attention to improving the efficiency of individual stores. Furthermore, the company's e-commerce business accounted for a higher share. In 2016, the company's main brand, Manifin, ranked second in the trading index. The other four high-end underwear brands ranked second in the 2016 Double Eleven brand, only Dianfen, entered 10th place. The company will directly benefit from consumption upgrades. China's high-end underwear market share is far lower than that of high-end underwear in mature economies, and there is huge room for development. Foreign experience shows that with the increase in per capita GDP, the underwear market will experience a significant consumption upgrade, and the market share of high-end underwear will increase markedly. We believe that China's underwear market will likely experience an inflection point in consumption upgrades within a few years. The 2016-18 EPS is expected to be 0.84 yuan, and the current stock prices of 0.91 yuan and 1.04 yuan are 36 times the corresponding 2017 P/E. The valuation level is at a historical average. Based on the fact that online sales have maintained rapid growth, at the same time, the cosmetics business may exceed expectations and maintain the company's buying rating. Maintain the company's “buy” rating. Risk suggests the risk of being more affected by the slowdown in economic growth; the risk of not being able to adapt to changes in consumer demand;