Key investment points: Huangshi Group achieved net profit of 133 million yuan in the first three quarters of 2016, close to the upper limit of performance guidelines for the semi-annual report. The company achieved revenue of 1,595 billion yuan in the first three quarters, an increase of 52.18% over the previous year, and net profit attributable to shareholders of listed companies of 133 million yuan, an increase of 76.38% over the previous year. In the single quarter of 16Q3, the company achieved revenue of 490 million yuan, an increase of 30.8% over the previous year, and net profit of 31.73 million yuan, an increase of 70.5% over the previous year. The year-on-year increase in the company's performance was mainly due to Shengshi Hotsun and Perfect Online Merger. According to the three quarterly report, the company expects to achieve net profit of 277-332 million yuan for the full year of 2016, an increase of 50%-80% over the previous year. The company's dairy industry and cultural business are operating steadily. The company's gross margin for the single quarter of 16Q1-16Q3 was 26.0%, 33.7%, and 36.4%, respectively. The gross margin for the single quarter increased quarterly. The overall gross profit margin for the first three quarters was 32.29%, a slight decrease of 0.97 percentage points from the previous year; the cost ratio for the first three quarters was 20.64%, down 1.82 percentage points from the previous year. The company is actively developing a layout centered around the children's ecosystem and holding hands with industry giants. From the end of August to September, the company strategically cooperated with Global Zhida, Qihu Technology, Sanji Culture, and New Oriental Express. Based on the company's extensive children's animation and preschool content, new media distribution channels covering the country, and television broadcasting platforms in various cities and counties, the company opened up business space in various fields such as children's smart terminals, children's Internet platforms, children's 3D content, and children's preschool education products. Investment recommendations We expect the company to achieve net profit of 303 million, 505 million, and 650 million dollars in 16-18, an increase of 64.33%, 66.55%, and 28.69% over the previous year. Considering the gradual maturation of children's ecology and expansion space in the future, 2017 is expected to bring about continued improvement in exam preparation performance. Overall, the mid-tier target market value was 21 billion yuan, and the corresponding target price was 25.06 yuan, maintaining the buying rating. Risk warning that extension integration falls short of expectations, the growth rate of the dairy industry is slowing down, and regulatory risks in the film and television culture industry