The company is a leading multi-brand underwear company with a national layout. The main brand Manifin has a leading market position and has ranked first in the market share of similar products for 14 consecutive years. The company's brand advantage is an important guarantee for sales growth. At the same time, benefiting from consumption upgrades and increased industry concentration, the company achieved steady annual revenue growth (+8.54%), the gross margin of the short-term underwear business was slightly damaged, and the upfront investment in new brand development and skincare products affected performance to a certain extent. Manifin Cosmetics began operating on Tmall in May. Men's underwear brand Joe Baishi is gradually expanding the market. The expansion of underwear product categories and the expansion of the cosmetics field based on female users are expected to open up new development space for the company. Currently, the company's total market value is 66+ billion dollars, and the short-term valuation advantage is not obvious. However, the company's market capitalization in circulation is small. In the medium to long term, the company's leading position is stable, and it has a foundation for steady growth, so we can pay attention to the volatile market pullback. Revenue/net profit increased by 8.54%/10.77% respectively in 2016, and the performance was basically in line with expectations. The company released its annual report. Revenue/operating profit/net profit to mother for 2016 were 2,049/2.49/183 million yuan respectively, up 8.54%/16.97%/10.77% year-on-year, with basic earnings of 0.85 yuan per share; the dividend plan was to distribute a cash dividend of 4 yuan (tax included) for every 10 shares; revenue continued to grow steadily, and upfront investment in new brand development and skincare products affected short-term profit performance to a certain extent. On a quarterly basis, 16Q4 revenue increased 11.29% year on year, net profit reversed the loss situation in the same period last year, and net profit to mother increased 24.4 million yuan year over year. Leading companies have outstanding brand strength and have achieved steady growth in the context of streamlining stores. The retail environment is still sluggish. The company reduced its direct-run stores from nearly 2,000 to 1,500, yet the company's revenue continued to grow steadily. By brand, the main brand “Manifin”, which is in a leading position in the market, drives the company's revenue to achieve steady growth; the sub-brand Yves is positioned as an upscale brand, and consumers place more importance on cost performance in a weak market context; while Manifin Cosmetics is in a pioneering period, contributing only 0.03% to revenue. By product, bras grew the fastest (1,223 billion yuan, 11.70%), underwear and thermal clothing grew steadily (2.57/314 million yuan, 4.57%/7.77%), while the OEM business was constrained by rising domestic costs and reduced foreign trade orders to achieve revenue of 40 million yuan, a year-on-year decrease of 24.37%. Gross margin declined slightly, and the decline in the expense ratio during the period led to an increase in net profit. Due to promotional pressure, gross margin declined slightly, falling 0.29% to 68.39% year over year, but overall stabilized. The expense ratio decreased by 0.9PCT to 54% during the period. Among them, the sales expense ratio and financial expense ratio decreased by 1.61% and 1.06% respectively, which led to an increase in net interest rates. Inventories are relatively stable, accounts receivable have decreased, and operating cash flow has declined slightly, but is positive. By the end of 2016, the company's inventory was 654 million yuan, up 8.64% year on year; accounts receivable were 168 million yuan, down 8.7% year on year; net operating cash flow was 213 million (225 million in the same period last year), which is expected to be mainly due to higher payment of purchases, which is reflected in an increase in inventory. Profit forecasts and investment ratings. The company is a leading multi-brand underwear company with a national layout. The main brand Manifin has a leading market position and has ranked first in the market share of similar products for 14 consecutive years. The company's brand advantage is an important guarantee for sales growth. At the same time, it benefits from consumption upgrades and increased industry concentration. The steady growth trend is expected to continue. However, cost factors due to the development of new brands and large upfront investment in skincare products in the short term affect performance to a certain extent. Manifin Cosmetics began operating on Tmall in May. Men's underwear brand Joe Baishi is gradually expanding the market. The expansion of underwear product categories and the expansion of the cosmetics field based on female users are expected to open up new development space for the company. Based on the current market situation, EPS is expected to be 0.96, 1.11, and 1.28 yuan respectively in 17-19. Currently, the total market value is 66+ billion yuan, and PE 32X in '17. The short-term valuation advantage is not obvious, but the company's market capitalization is small. In the medium to long term, the company's leading position is stable, and it has a foundation for steady growth. If there is a pullback in the volatile market, we can pay attention and maintain a “Prudent Recommendation-A” investment rating for the time being. Risk warning: Terminal retail sales fell short of expectations, sub-brand development fell short of expectations, and absorption of new production capacity fell short of expectations.