Summary of the report: The company is the world's leading manufacturer of yarn-dyed fabrics, and its performance in the third quarter of this year was impressive. The company has an integrated upstream and downstream industrial chain, such as embossing, spinning, yarn dyeing, weaving, finishing, knitting, home textiles, printing and dyeing, and garment making. It also has thermal power and sewage treatment facilities, and has strong cost advantages and strong risk resistance. As of the third quarter, the company's revenue was 2,724 billion yuan, up 3.78% over the same period, and net profit was 236 million yuan, up 32.69% over the same period, and is expected to increase by 15% to 35% for the whole year. Deeply cultivate the industrial chain and actively deploy overseas production capacity. The company currently has a production capacity of 210,000 tons of cotton yarn, 160 million meters of yarn-dyed cloth (second only to Lutai), a production capacity of 60 million meters of printed and dyed cloth, a production capacity of 11 million pieces of shirts, a production capacity of 6,000 tons of knitted yarn and knitted cloth, and a production capacity of 30 million meters for home textile fabrics. Yarn-dyed cloth, and shirts contribute 90% of the company's profits. In the short term, it is expected that the production capacity of yarn-dyed cloth will remain stable next year, and the production capacity of printed and dyed cloth and shirts will expand by about 10-20% and 20%, respectively. In the long run, the company is actively deploying production capacity to Africa, which enjoys cheap labor and preferential tax policies. Lay out the field of environmental protection to form new growth points for future performance. The company acquired the remaining 40% of the shares of its subsidiary Lianfa Environmental Renewable Energy Company (Lianfa Thermal Power) last year. After years of operation, the subsidiary has good technology and experience in electricity, steam, hot water, compressed air, river water treatment and sewage treatment, etc., and already has good profitability. The additional 40% of shares can contribute 2 million more to the company's net profit level every month in the first three quarters of 2016. At the same time, the company is also considering actively expanding related projects in the field of environmental protection in the future. The company's new management has expectations of transformation. Kong Lingguo and Jiang Bo from the post-80s, who have investment backgrounds in the financial industry, joined the management and injected new strength. At the same time, the company established a new investment company last year, and performance growth over the years has been steady, and the cash flow situation is good. As of the third quarter report, the company's cash assets on the company's accounts reached 1.26 billion yuan, providing sufficient financial support for the company's future mergers and acquisitions transformation. We believe that the company is operating steadily and has transformation expectations through extended mergers and acquisitions. The 2016-2018 EPS is expected to be 1.13 yuan, 1.20 yuan, and 1.30 yuan respectively, and the corresponding PE is 16X, 15X, and 14X, covering the “increased holdings” rating for the first time. Risk warning: downstream demand falls short of expectations; risk of cotton price fluctuations; risk of exchange rate fluctuations.