Core view In the first three quarters of 2016, the company's operating income fell 14.95% year on year, net profit increased 1.64% year on year, and net profit after deducting net profit increased 18.01% year on year. Among them, the company's operating income and net profit for the third quarter decreased by 49.33% and 32.74% year on year, respectively, and the performance growth rate declined significantly from the first half of the year. The slump in retail sales and industrial upgrading in the apparel sector led to a marked decline in profits due to high short-term investment. In the first three quarters, the company's clothing sector revenue fell 5.50% year on year, and net profit fell sharply by 42.45% year on year, mainly due to lower revenue and gross margin, and increased operating expenses such as leasing, decoration, and depreciation. Among them, the revenue of the brand apparel business fell 5.01% year on year, the number of sales outlets decreased by 113 compared to the beginning of the year, and the revenue of OEM and other businesses fell 13.53% year on year. Online channels continued to grow rapidly, with sales revenue rising 127.59% year over year in the first three quarters. The total revenue growth rate of the four sub-brands other than the main brand in the first three quarters was 9.25%, accounting for an increase of 1.36pct in total revenue. The increase in gross margin and the increase in investment income from settlement of some projects led to increased profits in the real estate sector. In the first three quarters, the company's real estate development business revenue fell 17.88% year on year, and net profit increased 50.35% year on year, mainly due to investment income from cooperative projects and increased gross margin. Among them, real estate sales revenue fell 18.86% year on year, and tourism and other business revenue increased 13.18% year on year. Due to the cyclical nature of the project, the pre-sale area and amount of the company's real estate have declined to varying degrees. The investment business continues to contribute to stable profits. In the first three quarters, the company's investment business achieved investment income of 2,919 billion yuan, an increase of 40.21% over the previous year. Among them, the change in Lianchuang's electronic accounting method and the sale of Changfeng Thermal Power's shares brought investment income of 1,249 million yuan and profit of 462 million yuan from the disposal of marketable financial assets. However, the net profit of the investment business decreased by 12.95% year-on-year due to land collection and storage income in the Textile City and the increase in current interest expenses during the same period last year. Continuing the “transformation of financial investment to industrial investment” idea, we expect that the company's future investment business will gradually focus on industries with promising long-term prospects, such as technology, new energy, health care, and tourism. The increase in holdings of controlling shareholders and financial and industrial capital reflects recognition of the company's value from the side. In March 2016, the controlling shareholders increased their holdings by a total of 40.48 million shares, considering the average cash dividend price of 14.02 yuan/share; Yao Jianhua, Zhu Chongyun, and the couple who have always acted listed in March. The company completed a fixed increase in April, considering that the cash dividend cost was 14.28 yuan/share, and locked in for 1 year. These all reflect the majority shareholders' confidence in the company's future growth and industrial capital's recognition of the company's value. The current low valuation level of the company and the expected dividend rate of around 3-5% per year have further increased the attractiveness of the company's stock price. The industrial upgrading and innovation of the apparel business, the transformation and retirement of the real estate business, and the “strategy+finance” strategy of the investment business will all provide space for the company's mid-term stock price. Financial forecasts and investment recommendations According to the three-quarter report, we lowered the company's revenue forecast for the next 3 years and raised the investment income forecast. We expect the company's 2016-2018 earnings per share to be 1.72 yuan, 1.73 yuan and 1.81 yuan respectively (the original forecast was 1.64 yuan, 1.70 yuan and 1.74 yuan). Referring to the average valuation level of comparable companies in the menswear and real estate sector, the company's clothing and real estate business was assessed 29 times and 10 times PE in 17 years. The investment business only takes into account the 10.6 billion yuan of the Bank of Ningbo and Pudong Development Bank. The total company valuation is 38.8 billion yuan, corresponding to the target price of 15.17 yuan, maintaining the company's “increased holdings” rating. Risk warning: The impact of financial market adjustments on the investment sector, clothing retail and real estate continued to fall short of expectations, etc.