Matters: The company released its 2016 three-quarter report. During the reporting period, it achieved: operating income of 265 million yuan, an increase of 86.74% over the previous year; net profit attributable to shareholders of listed companies of 47 million yuan, net profit after deduction of 44 million yuan, an increase of 321.29% over the previous year. Our comments on this are as follows. Comment: The performance exceeded market expectations, and the company entered an upward channel. The company's operating income has increased dramatically, and net profit has been reversed. The core is that the effects of strategic transformation and business optimization have been demonstrated, mainly from three aspects: 1. The revenue of the operator business and mobile game business increased steadily, and the gross margin increased significantly over the same period last year; 2. The mobile resale business, which integrates WiFi, mobile traffic, and corporate SMS, has grown rapidly, and revenue has increased dramatically; 3. The investment promotion work at the Beiwei International Center has been carried out smoothly, and the occupancy rate has reached 60%, and is expected to exceed the guidelines throughout the year. The company focuses on the “information service integrator” strategy and optimizes the business line to see initial results. The company predicts that it will achieve net profit of 720 to 80 million yuan in 2016. Accelerate the introduction of premium games from abroad. The company's game and video businesses have established differentiated competitive strategies and strong monetization capabilities. Profits are expected to rise steadily from 2016. Mobile video deepens cooperation with CCTV International and China Mobile, benefiting from the popularity of 4G and the double promotion of live game broadcasts. Mobile games focus on international IPs as boutique agents, and have already obtained distribution rights for various star games such as EA, King, and Rovio. The number of agency games is expected to continue to increase during the year. Traffic management is expected to become a new revenue growth pole. The company has made a strong entry into the mobile Internet access business, and is the only A-share listed company to fully cover WiFi and 3G/4G traffic operations. The total length of WiFi resale time exceeds 10 million hours, accounting for the largest share of third parties. 3G/4G traffic management has a high starting point, and the layout has a first-mover advantage, focusing on expanding Internet channels and customers in the financial industry. It is expected that traffic operations will continue to bring incremental revenue contributions. The company has already entered the corporate SMS business, forming a synergistic effect with WiFi and traffic, and is expected to become a new performance growth point. Set up a mobile Internet industry fund to expand and expand the layout. The company signed an agreement with Ping An Finance, Wonderful World, and Ping An Wisdom to jointly establish a mobile Internet industry investment merger and acquisition fund. The estimated total fund size is RMB 500 million, of which the company has pledged 150 million yuan. With the company's participation in the establishment of an industrial fund, the transformation of mobile Internet technology is expected to accelerate. The investment direction of the fund covers communication solutions, intelligent hardware, and mobile Internet services, such as video lottery cloud platforms, mobile games, etc. As the extension layout progresses in an orderly manner, the company's new strategic direction is expected to gradually take shape. Risk factors: New business growth falls short of expectations, industrial fund investment risk. Upgraded to a “buy” rating: The inflection point of the company's business development has been verified, the extension layout is conducive to accelerating the pace of transformation, and there is a margin of safety for the majority shareholders to increase their holdings at a cost of about 19 yuan. The company's 2016-2018 EPS forecast was raised to 0.29/0.41/0.52 yuan (the original forecast was 0.21/0.34/0.43 yuan). Considering the company's business reversal and extension expectations, the 2017 65X PE was given, corresponding to the target price of 26 yuan, and upgraded to a “buy” rating.