Key investment events: *ST Zhangzidao announced its 2016 three-quarter report. In the first three quarters, the company achieved operating income of 2.180 billion yuan (+7.00%) and net profit attributable to shareholders of listed companies of 31.8825 million yuan (+828.95%), of which the third quarter achieved operating income of 84.3528 million yuan (+14.50%), and achieved net profit attributable to listed shareholders of 25.1446 million yuan (+1701.47%). The company expects net profit attributable to shareholders of listed companies to be 45 million to 55 million yuan in 2016, turning a loss into a profit. The restoration of the company's operations and management is beginning to bear fruit. Expenses have been drastically reduced, and gross margin has risen year over year. In the first three quarters of 2016, the company achieved net profit attributable to the parent company of RMB 31,832,500, a sharp increase of 828.95% over the previous year. The main reason was that the aquaculture industry's gross margin rebounded, and expenses fell sharply during the period. The company's gross sales margin for the first three quarters was 14.97%, up 0.40 percentage points from the previous year, and the net sales margin was 2.88%. At the same time, the company controlled three fees well in the first three quarters. The cost ratio declined significantly year on year. Sales expenses were 124 million yuan, accounting for 5.67% of operating income, down 2.36 percentage points from the previous year; management expenses were 128 million yuan, accounting for 5.88% of operating income, down 1.40 percentage points from the previous year; and financial expenses were 101 million yuan, accounting for 4.65% of operating income, down 1.56 percentage points from the previous year. The company's investment income was 17.1362 million yuan, up 4807.25% year on year, mainly due to the sale of shares in subsidiaries and the increase in net profit of joint ventures. The company's marine ranch resources have recovered well, and the next year's performance is expected to grow steadily. According to our grassroots research, the company's shrimp and scallop yield recovered to over 36 kilograms per mu in the first half of the year, reaching the break-even line. This year, the area that can be caught is 600,000 mu (2.4 million mu “3+1” round). Furthermore, production of sea cucumbers and abalone has also gradually recovered. With the gradual improvement of the omnichannel layout of the domestic market and the gradual increase in international market orders in the later stages, the company aims for its shrimp and scallops to return to 60 kg per mu within the next two years, and the company's performance is also expected to continue to grow along with the recovery of mu production. The professional consulting team invests in the company and lays out medium- to long-term downstream transformation strategies. In June of this year, the company signed a share transfer agreement with Shanghai Hexiang Investment Management (the main shareholder is Shanghai Hejun Investment Consulting Co., Ltd.) and others, introducing a professional consulting team. As a first-class consulting company in China, Hejun will provide specialized strategic planning and consulting services for the company's transformation into the downstream food processing industry. At the same time, the company's omni-channel layout continues to improve. Food and cooking products, such as garlic vermicelli, coated squid rings, and black pepper salmon, etc., will inject new vitality into the company's future food-side development. The company's marine ranch resources have recovered, operating efficiency has gradually improved, profitability has continued to improve, and transformation expectations are strong after introducing a professional consulting team. We expect the company's net profit in 2016-2018 to be 0.55, 1.68, and 302 million yuan, with EPS of 0.08, 0.24, and 0.42 yuan respectively, giving it 30 XPE in 2018, with a target price of 12.6 yuan, maintaining the “increased holding” rating. Risk warning: Continued downturn in the aquaculture industry; uncertainty in the natural conditions of the ocean.