Incident: The company released financial report for the third quarter of 2016. During the operating period, the company's revenue was 3.26 billion yuan, up 4.15% year on year, and net profit attributable to shareholders of listed companies was 355 million yuan, up 31.4% year on year, basic earnings per share of 0.24 yuan, and ROE 11.8%. Comment: The company's performance continued to grow steadily, thanks to the high growth rate of LED lighting penetration in 2016. On the other hand, the increase in the company's automation rate and the reduction in the overall cost ratio due to scale effects, both had a positive impact on the company's net profit. The overseas LED market is in high demand, and the company fully enjoys the price advantage in the international market. With the company's transformation from traditional lighting to LED lighting, the company's LED overseas market revenue grew rapidly after 2013, becoming a pillar driving the company's performance growth. Driven by the acceleration of customer development and the gradual establishment of its own brand, the company will continue to grow steadily in the future. In a situation where LED lighting applications are fiercely competitive, the company seizes the industry opportunities where LED lighting is rapidly becoming popular to achieve rapid growth in the company's business. Under the trend of increasing industry concentration, Sunshine Lighting can increase its market share with the advantage of scale. We expect the company's LED business to account for 90% in 2016. In line with the rise of smart homes, the company started the smart lighting business in 2015. After the company fully transformed LED products, it used technology, brand and customer advantages to launch smart lighting products based on home and engineering, creating a new growth point for the company's future performance. Profit forecast: We forecast that the company's revenue for 2016-2018 will be 5.68 billion yuan, 7.21 billion yuan, and 8.53 billion yuan. The net profit for 2016 to 2018 will be 599 million yuan, 769 million yuan, and 936 million yuan, respectively, with corresponding earnings per share of 0.41 yuan, 0.53 yuan, and 0.64 yuan. It was reiterated that the company was given an “increase in wealth” rating. Risk warning: 1) Increased competition in the LED market; 2) the risk of falling LED lamp prices, etc.; 3) The company's foundry business falls short of expectations.