Performance summary In the first three quarters of 2016, the company achieved operating income, operating profit, and net profit attributable to shareholders of listed companies of 280 million yuan, 25.1087 million yuan, and 26.2608 million yuan respectively, up 4.74%, -1.04%, and 6.78% year-on-year respectively. Achieve full dilution of EPS of 0.10 yuan/share, in line with expectations. The net cash flow from operating activities was 7.2408 million yuan, higher than the net profit for the same period. On a quarterly basis, the company's Q1/Q2/Q3 revenue growth rate was -3.50%/7.90%/9.36%, respectively, and net profit growth rate was 31.22%/1.40%/-6.54%, respectively. Business analysis revenue increased steadily, and net profit margin increased slightly. In the first three quarters, the company's revenue continued to grow (+4.74%), and gross margin fell slightly to 26.39% (-2.60pct.). The cost rate for the period increased by 0.34 pct. Among them, the management fee rate and financial cost rate decreased by 0.31pct/1.04pct. , the sales expense ratio increased by 1.68 pct. This is mainly due to the increase in online e-commerce promotion costs and advertising expenses. Furthermore, the company's net profit margin was 9.39% (+0.18pct.) , profitability has improved slightly. The new Helen series of products was grandly launched, and the brand influence continued to increase. The company has always been committed to implementing its own brand strategy. Its own brands are “Helen” and “Wendelon”, and its cooperative brands include “Ferlich,” “Petchoff,” “Roser,” and “Zimmerman.” In 2016, the company actively promoted and built brands through cooperation with Disney, hosting the “Helen Cup” piano competition, and inviting famous pianists from home and abroad to tour. In October, the company's three new product series, Helen Piano Vienna Series, Smart Piano, and Helen Guitar, were grandly released. Among them, the Vienna series pianos are comparable to Europe's top piano products with their high-end design and top configuration, which has greatly enriched the company's high-end brand series. The launch of the Helen guitar brand and products also marks the company's official entry into the field of stringed instruments. Actively expand sales channels and operate online and offline simultaneously. 1) Offline layout: Currently, the company has nearly 300 piano stores in Europe and North America, and more than 40 piano stores in Japan are selling Helen pianos as agents. There are more than 800 piano stores that distribute the company's products worldwide. In the future, the company will continue to expand to distribution points in second- and third-tier cities, and the market share of the company's products will increase simultaneously. 2) E-commerce platforms: The company has “Helen Musical Instrument Flagship Stores” on e-commerce platforms such as Tmall and Jingdong. Through online activities such as “6.18” and “Double Eleven”, the results of marketing campaigns can be achieved. Overall, we expect the company's overall business to continue to improve in the fourth quarter, benefiting from new product launches, RMB depreciation favoring exports, and Double Eleven sales. The layout of art education continues to deepen, accelerating the pace of transformation into a comprehensive cultural enterprise. Since its listing, the company has actively deployed art education and training services to achieve the goal of transformation into a comprehensive cultural enterprise. In August 2014, the company established “Helen Art Education Investment Co., Ltd.”; in 2015, the education company invested in the establishment of a joint venture “Ningbo Helen Aegean Education Information Consulting Co., Ltd.” to introduce Professor Zhou Fei's original piano education for young children and carry out the “Helen Piano Classroom” project; in June of this year, the company cooperated with the School of Art of Xiamen University to successfully host the “'Helen Cup' 2016 National Youth Piano Competition”, further deepening the art education layout. On September 26, the company received 6.5 million yuan of special funding for cultural industry development from the central government in 2016, further confirming the company's deep cultural genes. In the future, with the completion of the company's fixed addition project, the company's existing traditional piano products will achieve industrial upgrading, complementing the offline art training education already carried out by the company, and providing users with product sales and integrated services integrating smart piano products, Internet technology, and art training and education systems. Risk factors are the impact of imported used pianos, market competition has intensified; raw material prices and labor costs have risen; and the promotion of art education has fallen short of expectations. Profit forecasts and investment suggestions There is huge room for development in the domestic art education market. We are optimistic about the integrated development potential of the company's piano manufacturing+art education model and flexible private management mechanisms in the art education market. We maintain the company's 2016-2018 EPS forecast to 0.14/0.17/0.22 yuan/share (three-year CAGR 20.6%), and the corresponding PE score is 165/137/110 times, maintaining the company's “increased holdings” rating.