Focusing on the “Full Course Cloud+ and Education” dual platform, the growth rate of endogenous students in the third quarter was impressive. In the first three quarters of 2016, the company achieved operating income of 629 million yuan, a year-on-year increase of 189.61%; realized net profit of 62 million yuan, an increase of 67.53%; and net profit attributable to shareholders of listed companies was 42 million yuan, an increase of 27.79% over the previous year. During the reporting period: 1) The EdSaaS business achieved revenue of 233 million yuan, a year-on-year increase of 231.06%, mainly due to the rapid expansion of market coverage and user base since 2016; 2) the home-school interactive upgrade business achieved revenue of 196 million yuan, an increase of 43.44% over the previous year, mainly due to product superposition and collaboration between self-operated channels and post-investment channels; 3) Continuing education business achieved revenue of 164 million yuan, maintaining a steady growth trend. Overall, considering that the EDSaaS business and the continuing education business are seasonal, we expect the company's profit to increase significantly in the fourth quarter, which is worth looking forward to. Actively deploying education informatization 2.0 is expected to achieve rapid business growth. In recent years, national policies to promote education informatization have been introduced frequently, and investment in education informatization is increasing. In 2015, the company actively laid out the education informatization business sector. Since the release of Full Course Cloud 1.0 in August 2015, the company has continued to develop and iterate, fully polished and upgraded the entire course cloud product, and released Full Course Cloud 2.0 on August 28, 2016, which integrates seven major standardized product modules, including campus communication, smart teaching, smart teaching, resource center, campus office, campus payment, and smart campus, to further promote product optimization, upgrade and operation coverage. We believe that by actively promoting the implementation of full-course cloud product upgrades, operation system construction and promotion, the company is expected to achieve rapid business growth. Continued investment in R&D costs and management costs will lay the foundation for future core traffic. Investment suggestions and performance forecasts: Based on (1) the company is the leader in K12 online education in China, and the number of teachers and students in service schools is leading in the country; (2) in 2016, the Edsaas business was focused, the continuing education business was consolidated, and growth was on the fast track; (3) the company actively explored opportunities for extension layout, continuously integrated high-quality targets, and leveraged synergy to strengthen entry advantages, we expect the company's 2016-2018 EPS to be 0.37 yuan, 0.63 yuan, and 0.75 yuan respectively. Referring to the PE level in the same industry, considering the company's leading edge in the industry and high growth, we gave the company a valuation of 100 times in 2016, corresponding to the target price of 37.00 yuan, and maintained the buying rating. Risk warning: transformation falls short of expectations; risk of declining profitability; risk of economic downturn.