Key investment events: The company issued an announcement that it intends to hold 20% of the shares of Mierle Dairy (Shanghai) Co., Ltd. through a wholly-owned subsidiary, Guangdong Jinrabi Investment Co., Ltd. with 50 million yuan of its own capital through capital increases and share transfers. The product range is rich, and the layout of the mother and child ecosystem is progressing steadily. Mialer Dairy (Shanghai) Co., Ltd. mainly deals in imported Danish Moohko (Moohko) infant formula in original cans, and conducts direct marketing and sales through online channels of JD, Taobao, and WeChat. The Moohko brand is owned by Mille Baby A/S, a Danish government fund that IFU participated in the investment. It is a full member of the Danish Agriculture and Food Council and has the Danish Crown logo. The Moohko factory comprehensively controls the high quality of milk from the four aspects of milk formulation, food safety, animal welfare, and environmental protection. Prior to the capital increase, Mialle's shareholders included DHA, DMA, ACTC Mille Investment, McColt Investment, and Shanghai Yongji. In 2016, Mile achieved revenue of 120 million yuan, a year-on-year increase of 103.3%, and a net profit of 7.92 million yuan, turning a loss into a profit. According to the negotiations, the target company promised net profit of no less than 25 million yuan and 40 million yuan after tax in 2017 and 2018, reflecting shareholders' optimism about Mialle's future growth prospects. By investing in Merle, the company officially entered the baby food industry, enriching the company's existing product range while cultivating the company's new profit growth points. It can not only give full play to the advantages of direct online management of Merle, but also form collaboration with the company's offline mother and child stores, which is an important step for the company to build a mother and child ecosystem. Benefiting from the child policy and consumption upgrades, the performance growth rate is expected to increase. In 2016, the number of births in China reached 18.46 million, an increase of more than 1.8 million, a record high since 2000. The implementation of the two-child policy and the upgrading of consumption will undoubtedly drive a sharp increase in demand for consumer goods for mothers and children. As one of the leading domestic maternal and child brands, the company will directly benefit from the high growth of the industry. The company's brands have strong recognition and reputation among mother and child groups, so they can use this advantage to promote the construction of a comprehensive ecosystem for the Chinese maternal, child and child industry. In September 2016, the company announced that it plans to invest 225 million yuan through its subsidiary Rabbi Mother & Baby (Hong Kong) Co., Ltd. to participate in the subscription of the Asia Pacific International Maternal, Infant and Child Industry Fund shares. The fund's investment direction is mainly high-quality maternal, child and child assets in the Asia-Pacific region, Europe, and the US. Currently, the company still has more than 400 million yuan in disposable cash. The main business is developing steadily. There is huge room for imagination in the future in terms of culture and entertainment, consulting and education, and domestic service, etc., and the extended development is worth looking forward to. Profit forecasts and investment advice. The company's 2017-2019 EPS is estimated to be 0.42 yuan, 0.5 yuan, and 0.61 yuan respectively. Considering that the company will directly benefit from the high growth of the maternal and child industry, results are gradually showing in marketing network layout and management adjustments, maintaining the “increased holding” rating. Risk warning: Risk of sales growth falling short of expectations; risk of extension expansion falling short of expectations.