Key points of the report describe events Falson released a performance forecast for the first three quarters of 2016. During the reporting period, the company achieved net profit attributable to shareholders of listed companies of 130 to 140 million yuan. After retroactive adjustments, it was 55 million yuan for the same period last year. According to this calculation, the company achieved net profit attributable to shareholders of listed companies of 0.91 to 101 million yuan in the third quarter. After retroactive adjustments, the same period last year was 22 million yuan. According to the latest share capital calculation, it achieved an EPS of 0.24 to 0.26 yuan in the third quarter, an EPS of 0.06 yuan for the same period last year, and 0.10 yuan for the second quarter. Incidents commented on the steady increase in factoring business combined with asset transfer earnings, and profit in the third quarter increased markedly year-on-year: the company gradually divested traditional loss-making assets (including three companies, special steel products, cable sales, and metal products) on the basis of the traditional steel wire rope main business to achieve a light business pattern. At the same time, through the acquisition of Mosan Factoring, the company aims to expand financial services with good profit prospects, laying a solid foundation for comprehensive transformation and building a high-quality financing service platform. Specifically, there are the following main reasons for the significant year-on-year increase in profit in the third quarter: 1) Currently, the net accounts receivable of domestic industrial enterprises has maintained steady year-on-year growth, while traditional financing channels for manufacturing enterprises are relatively limited. In this objective context, the domestic commercial factoring market space has been gradually freed up thanks to policy support. Moshan Factoring is the first domestic asset securitization project company to launch an asset securitization project based on factoring financing claims. Its business scope covers industries such as trade, energy, machinery manufacturing, and construction engineering. Therefore, under the rapid growth of the factoring industry, the scale of Moshan factoring business, which has a comparative advantage, continues to expand, and profits have increased steadily, becoming an important support for the company's performance growth; 2) The company completed the divestment of special steel products companies, metal products companies, and metal cable sales companies on September 29, 2016, not only contributed 47 million yuan in investment income to the company, but also to the company The main steel wire rope business operations have reduced pressure. On a month-on-month basis, it also benefited from the rapid growth in the scale of Moshan's factoring business, combined with the transfer of loss-making steel assets to confirm investment income. The company's profit growth rate in the third quarter was 142.45% month-on-month — 169.21%. Introduce strategic shareholders to help the financing business advance steadily: Resources and capital are the core competitiveness of the financing business. Take factoring business as an example. On the one hand, resource advantages with a broad range of business reach guarantee the volume and quality of factoring business; on the other hand, capital advantage can ease the extent to which factoring scale is constrained by regulatory leverage, and break through the bottleneck of excessive reliance on financing channels in the profit model. Currently, Jiangyin Yaobo, a subsidiary of the Zhongzhi Group, has increased its holdings in Phare's victory several times, and the shareholding ratio has reached 15%, which may indicate that China Plant has strong expectations for False's future business plans. After all, the entry of Zhongzhi Group, which has diversified businesses, will help expand the operating space of the company's financing business. It is estimated that the 2016 and 2017 EPS will be 0.46 yuan and 0.51 yuan respectively, maintaining the “buy” rating.