In the third quarter, the single quarter bucked the trend in the single quarter, revenue +38.84%, net profit from the mother +29.03%. The company's operating income for the third quarter of 2016 was 1,176 billion yuan, up 13.96% year on year, net profit attributable to common shareholders of listed companies was 60.47 million yuan, down 14.37% year on year, and net profit after deducting non-return net profit increased 2.97%. The company achieved a year-on-year increase of 38.84% in single-quarter operating income in the third quarter, a 29.03% year-on-year increase in net profit attributable to common shareholders of listed companies, and achieved earnings per share of 0.061. The performance was in line with expectations. The sharp increase in performance in the third quarter was mainly due to the company's products gradually entering the peak season in the third quarter, and overall efforts in product upgrades, marketing innovation, and e-commerce strategies. On the product side, focusing on the development strategy of “black nutrition and selenium products,” getting involved in the beverage industry to create black milk has become a new profit growth point; increasing marketing efforts and market layout; and developing e-commerce expansion channels. The product structure was upgraded to launch health and nutrition products, and e-commerce channels were created in conjunction with the upgrading of consumer demand. Southern Black Sesame launched canned food from bags and cups to ready-to-drink canned food. According to statistics, from January to September 2016, the sales volume of canned Southern Black Sesame Paste exceeded 10 million yuan in the national Darunfa store system alone. At the same time, efforts were stepped up to create a new black milk product, in line with the general trend of nutritional health drinks. In addition, flagship stores have been set up on major websites such as JD, Tmall, and Store 1, taking both online and offline channels. Tmall's “827 Gathering Deals” campaign received orders for 4,000 event items within 3 days. Black Black Milk debuted at JD on January 10, and the performance increased tenfold on that day. In terms of marketing, the company made bold breakthroughs and pioneered everything from last year's “black advertisement” to this year's “Black Boss” marketing event, from the “Summon the Goddess to Save Hungry Goods” series of marketing activities to a variety show with multiple titles. In order to obtain more favorable advertising resources, pre-paid advertising fees increased, and financial expenses increased due to increased interest on loans. The net operating cash flow for the current period was -94.5408 million yuan, and the number of prepayments at the end of the period reached 349 million yuan. Compared with the beginning of the year, there was a year-on-year increase of 187.72%, and monetary capital decreased by 40.99%. The main reason was the increase in prepaid advertising fees and material loans to obtain more favorable advertising resources. Net investment cash flow was -91,888 million yuan, mainly due to the large number of equity payments made by subsidiaries in the previous period. Net fund-raising cash flow was -73.379 million yuan. In the current period, while returning maturing loans, parent company bank loans were increased, so financial expenses were 16.09985 million yuan, an increase of 488.15% over the previous year. Profit forecasting and valuation The company's equity incentives require an average annual revenue growth rate of not less than 30% for 2016-2017, with non-net profit not less than 200 million yuan and 250 million yuan. Currently, the company has terminated its acquisition plan for Jinil edible oil, and it is expected that other acquisition projects may be launched to meet the incentive requirements. In the first half of the year, the company increased investment in advertising of new products, terminal promotion, and support for newly developed dealers, which led to an increase in annual sales expenses. In the second half of the year, sales of the company's products entered a peak season, and new products gradually gained strength. Affected by external factors such as the economy and market decline, the prosperity of the food industry, especially prepared foods, is low, so the company's performance has been affected to a certain extent, so the profit forecast has been lowered. According to estimates, the company's 2016-2018 EPS is expected to be 0.22 yuan, 0.36 yuan, and 0.44 yuan respectively, giving the PE valuation 23 to 25 times that of 2017, and the target price will be adjusted to 8.3 to 9.0 yuan, maintaining the “increased holdings” rating. Risk warning: food safety issues, economic downturn risks.