Event: The company released its 2016 three-quarter report. In the first three quarters of 2016, the company achieved operating income of 1,422 million yuan, an increase of 96.77% over the previous year, and realized net profit attributable to shareholders of listed companies of 308 million yuan, an increase of 274.46% over the previous year. Key investment points: The four major sectors collaborated well, the performance of big data and online education was impressive and contributed to a significant increase in performance, the four major sectors collaborated well, and the big data and online education business performed well. 1) Smart conference: The company's smart conference sector revenue increased 13.93% year on year in the first three quarters, adding Philipson video conferencing cloud services to the traditional project profit model to collect service fees and dig deeper into long-tail users; 2) Smart cities: In the first three quarters, the company's smart city sector revenue increased 124.17% year on year. The company, led by the Philisin Smart City Research Institute, discussed specific information benefits with governments at all levels. Actively cooperated. Cooperation intentions were reached with Lishui City, Weinan City, and Quanzhou City. The company and its subsidiaries won many smart bids one after another city The project also continuously improved the smart city sector layout and business strength through mergers and acquisitions; 3) Big Data: The company's big data business showed an explosive growth trend in the first three quarters, with a year-on-year growth rate of 9512.22%. During the reporting period, the company successively won bids for the National Development and Reform Commission's Internet big data analysis system, software procurement, development and system integration projects, Nanyang social credit system platform construction, etc., and completed the 1:70 ROI operating index of the China Southern Airlines Mobile project. Through capital operations such as mergers and acquisitions and equity participation, the company has continuously strengthened its big data business strength, expanded big data industry applications, and achieved explosive growth in the big data sector; 3) Online education: The company's online education business continued to grow rapidly. The revenue growth rate in the first three quarters was 452.58%. The company strengthened the advantageous positioning and business integration of the national training network and the connected world, and launched a mechanical cloud project on the basis of ensuring the continuous development of one brand, two platforms, and three businesses, which achieved a certain level of social recognition. On the basis of collaboration and integration of the two platforms, the company will fully tap the demand potential of markets such as academic education, vocational education, and continuing education for professional and technical personnel, and increase investment in the “Internet+Intelligent Manufacturing” and “Smart Education” product lines to form a new business flashpoint. The gross margin remained stable, and the cost ratio declined markedly during the period. 1) In the first three quarters of 2016, the company's comprehensive gross margin was 43.23%, an increase of 1.33 percentage points over the previous year, and the gross margin level was stable; 2) In the first three quarters of 2016, the company's period expense ratio was 19.50%, a year-on-year decrease of 6.89 percentage points, of which the sales expense ratio fell 2.34 percentage points to 5.11%, the management expense rate fell 2.99 percentage points to 13.24%, and the financial expense ratio fell 1.56 percentage points to 1.15%. The company's expenses were well controlled, and the period expenses rate declined markedly. Profit forecasting and investment ratings We believe that the company's four major sectors collaborate well, traditional business is developing steadily, big data and online education businesses have performed well, and that the gradual emergence of synergies between mergers and acquisitions will further support the growth of the company's performance. The company's 2016-2018 EPS is expected to be 0.41, 0.54, and 0.71 yuan/share respectively, maintaining the “increase in holdings” rating. Risks suggest that big data business promotion falls short of expectations; progress of smart city business projects falls short of expectations; mergers and acquisitions integration falls short of expectations, etc.