1. Event Overview The company released a performance forecast for the first three quarters of 2016. During the reporting period, the company expects to achieve operating income of 608-651 million yuan, an increase of 180-200% over the previous year; net profit attributable to shareholders of listed companies is about 3628.92-42.8873 million yuan, an increase of 10-30% over the previous year. 2. Analysis and judgment Edsaas entered the marketing period, and the third quarter turned a year-on-year loss into a profit. During the reporting period, the company benefited from a combination of factors such as rapid promotion of the Edsaas business, channel expansion for the home-school interactive upgrade business, and steady growth in continuing education, and revenue growth again achieved rapid growth. At the same time, net profit attributable to listed companies for the third quarter is expected to reach 3805 million yuan to 6.975,500 yuan, a significant increase from last year's loss of 6542 million yuan. In our review of the company's semi-annual report, we pointed out that the Edsaas business has achieved results on the revenue side through an early strategic layout, and will gradually enter a profit period. The current increase in net profit for the third quarter is in line with previous expectations, and Edsaas will continue to gain strength in the future and become the main driving force for the company's performance growth. The acquisition of 47.33% of Shanghai Wenxi's shares helps the Education Information Technology Development Company plan to increase its holdings of Shanghai Wenxi by 47.33% by means of cash payments. If successfully completed, the company will hold a total of 75% of its shares. Shanghai Wenxi is a long-term service provider for education informatization projects of education bureaus in Shanghai, Shenzhen and other districts. It serves nearly 1,000 schools, including more than 120 in Shanghai, and the overall performance target for the next three years is not less than 57 million yuan. If this equity acquisition is successful, the company on the one hand can use Wenxi's rich channel resources to deepen its strategic layout in the Shanghai and Shenzhen regions; on the other hand, Shanghai Wenxi's rich project experience in education informatization and mature digital campus construction model will complement the company's Edsaas business. The restructuring was suspended for some reason, focusing on subsequent developments, the company suspended trading in the early stages and planning major asset restructuring matters. However, due to the large amount of this restructuring transaction and the complexity of the evaluation work involving the underlying assets, the overall progress was affected. From the perspective of protecting the interests of all shareholders and the company of the listed company, the company decided to stop planning this major asset restructuring. After that, it will continue to follow up on the progress of the underlying assets and start related projects when the time is ripe. 3. Profit forecasts and investment recommendations maintain a “highly recommended” rating. The estimated EPS for 16-18 is 0.48, 0.83, and 1.29 yuan, which is estimated at a PE range of 45 times to 50 times that of comparable listed companies in 2017, giving a valuation range of 37 yuan to 42 yuan for the next 6 months. 4. Risk warning: 1) Online education business market expansion falls short of expectations; 2) risk management; 3) policy implementation falls short of expectations.