Key investment points Net profit for the 3rd quarter reached a record high, and gross margin performance was outstanding: in the 3rd quarter, the company achieved revenue of 1,134 billion yuan, down 7.85% year on year, up 2.79% month on month; net profit attributable to shareholders of listed companies was 1.37 yuan, up 49.72% year on year, up 17% month on month. Revenue for the third quarter declined for the first time, and revenue for the full year of this year is expected to fall short of expectations. However, benefiting from better-than-expected gross margin performance in the 3rd quarter, up 3.92 percentage points year on year and 0.52 percentage points month on month, the net profit for the 3rd quarter reached 137 million, a record high. Judging that although revenue for the 3rd quarter fell short of expectations, profitability increased significantly, first because the product sales structure was adjusted faster than expected, the adjustment was nearing completion, the traditional CFL business declined rapidly, the LED share increased, and the CFL business was streamlined and efficiency improved; second, because the company selectively took orders to control efficiency. The full-year results are likely to exceed company and market expectations and meet our expectations: since we raised our rating in the 3rd quarter of last year, we have been optimistic that the rapid penetration of LED lighting this year and next will have substantial benefits for the company. Net profit of 355 million yuan has been achieved in the first three quarters of this year. The net profit for the whole year is likely to far exceed the company's original estimate of 400 million yuan, and is expected to reach our estimate of 487 million yuan. LED lighting leaders enjoy a rapid increase in LED penetration rate and maintain a “buy” rating: LED lighting has been in a period of rapid penetration in 16 years, and new channels have been developed smoothly, and performance growth is highly certain. The company expects net profit of 400 million in 2016, which is a prudent expectation. Judging from LED's rapid penetration and the company's three-quarter report, we think the company's net profit is expected to reach 487 million in 2016. However, due to the fact that the product structure was adjusted faster than expected and the company selectively took orders, the 16-year revenue was slightly lowered to 4.57 billion yuan, maintaining the company's 2016-2018 EPS of 0.34 yuan, 0.4 yuan, and 0.47 yuan, corresponding to 23, 19 and 16 times PE, maintaining a “buy” rating. Risk warning: LED price decline exceeds expectations, channel layout is not progressing smoothly