Event: On October 25, 2016, Sichuan Daichisheng released the report for the third quarter of 2016. The company's performance was good. From January to September, the company achieved a total operating income of 205 million yuan, an increase of 55.20% over the previous year; realized net profit attributable to shareholders of listed companies of 206.758 million yuan, an increase of 5.98% over the previous year; net profit after deducting non-recurring profit and loss was 17.845 million yuan, an increase of 10.56% over the previous year. Comment: Revenue growth has slowed, and gross margin has increased slightly. Compared with the revenue growth rate of 72.54% in the company's semi-annual report, the revenue growth rate for the first three quarters decreased by 17.34 percentage points, mainly due to a decrease in the year-on-year revenue growth rate in the third quarter. The company's gross margin for the first three quarters was 29.54%, up 2.69 percentage points from the 26.85% disclosed in the semi-annual report. Considering that the “information technology and other products and services” business with low gross margin accounted for a relatively large share of revenue in the third quarter, while the “aviation and air traffic control products and services” business, which has a high gross margin, has signed a sharp increase in new contracts this year, but confirmed revenue for the current period is low. In the future, with the gradual confirmation of revenue from high-margin projects, the company's overall profit level will increase. The company disclosed that the year-on-year change in net profit of the mother in 2016 is expected to be between 15% and 35%, and the performance will continue to develop steadily. Actively promote new industries and increase video big data. The company actively promotes emerging businesses represented by face recognition and virtual reality. In the field of face recognition, the principle prototype and application prototype of the high-precision 3D full-face camera developed by the company have been completed, and the depth measurement accuracy of facial details has reached 0.1 mm. With the company's 3D recognition software, it can achieve a recognition accuracy rate of more than 99.5% and strong anti-counterfeiting capabilities, leading the international level of technology. At the beginning of September, Sichuan University Zhisheng and Jiadu Technology purchased part of Suzhou Qianshitong's shares as co-buyers. After the completion of this foreign investment, the company will acquire 10.90% of Suzhou Qianshitong's shares. Suzhou Qianshitong has long been deeply involved in the field of video big data. It has a research team composed of experts in the field of graphics, and has received many national and provincial science and technology progress awards. Qianshitong's intelligent video search technology can be combined with the company's existing face recognition and vehicle recognition technology to form competitive products and help accelerate the company's urban intelligent system business layout. Profit forecast and rating: We expect the company's operating income from 2016 to 2018 to be 340 million yuan, 442 million yuan and 574 million yuan respectively. The net profit attributable to the parent company is 46.559 million yuan, 53.57 million yuan and 65.618 million yuan respectively. Based on the latest share capital, earnings per share are 0.21 yuan, 0.24 yuan and 0.29 yuan respectively. The latest stock price corresponding to PE is 151 times, 131 times and 107 times, respectively. Maintain a “hold” rating. Risk factors: The industrialization process of new businesses is blocked; competition in the fields of face recognition and virtual reality is intensifying.