The 1-3Q results were in line with expectations, and Canada Foods announced January-September results: operating income of 1,339 billion yuan, up 5.1% year on year; net profit attributable to parent company was 128 million yuan, up 10.1% year on year, corresponding to earnings per share of 0.11 yuan. Net profit attributable to the parent company after deduction was 116 million yuan, an increase of 21.9% over the previous year, mainly affected by the investment income of the Hexing Equity Investment Fund in the same period last year. The 1-3Q company's sales/management expense ratio was 9.5%/6.2% respectively, and the sales expense ratio decreased by 1.3 pct year-on-year, mainly due to the company's reduction in CCTV advertising expenses. Development trend The growth rate of the soy sauce category is slowing down, and the single product strategy continues. The company is actively promoting the upgrading of the product structure by creating medium and high-end products such as “fresh noodles” and “original brewing”. 1-3Q Noodle Fresh has maintained a high growth rate of more than 20%, and the original brewing growth rate has slowed. The estimated revenue scale is basically the same as the same period last year. This is related to the fact that the company's supermarket channels in Tier 1 and 2 cities are in the early stages of establishment, and competition for high-end soy sauce is fierce. In '17, the company will continue to adhere to differentiated management and large single product strategies, seize market share in shopping mall channels while actively developing new channel businesses such as group buying. Vegetable oil maintains a high growth rate and expands regional markets through expansion. 1-3Q's vegetable oil product revenue continued to grow at a high double-digit rate. Tea seed oil is currently on a small scale and is still in the market cultivation period. Vegetable oil products are in a period of promotion from advantageous regional markets such as Hunan and Jiangxi to the national market. The basic categories put sales volume and share first, and discount promotions have a certain impact on gross margin. In addition, the investment capacity of soy sauce products releases additional depreciation costs. The gross profit margin of 1-3Q companies was 28.1%, down 1.1 pct from the previous year. The 17-year fund-raising production capacity was fully released to ensure product upgrades. It is expected that the production capacity of the 200,000 tons of high-quality soy sauce and 10,000 tons of high-quality tea seed oil projects raised by the company in 2017 will be fully released, providing production capacity guarantees for the company's key high-end products. We believe that the company's future focus is still on employee shareholding and endogenous growth impetus injected by equity incentives. The company may also consider expanding categories through external mergers and acquisitions to increase revenue and profit. Profit forecasts We raised our earnings per share forecasts for 2016 and 2017 by 4% and 10% from RMB 0.14 and $0.16 to RMB 0.15 and $0.18, respectively. Valuation and recommendations Currently, the company's stock price corresponds to a price-earnings ratio of 44 times in '17. The valuation was switched to '17 and given 38 times P/E. We maintained a neutral rating, but raised the target price by 22.46% to RMB 6.87. Prices of risky raw materials fluctuate, industry demand is weak, and market investment is increasing.