Main points of investment:

Maintain the "overweight" rating. The recovery of home textile business has led to the recovery of semi-annual report results, which is expected to continue this trend in 2016-17; transform into IP operators from 2016, and expand star peripheral business and IP distribution business in the future. From 2016 to 2018, the eps was maintained at 0.39ax 0.56 and the target price was 52.65RMB, corresponding to 135x PE in 2016, maintaining the overweight rating.

Home textile business hit bottom and rebounded, half-yearly report performance recovery growth. In the first half of 16 years, the company's revenue was 290 million yuan and its net profit was 9.89 million yuan, an increase of 13.96% and 6.33% respectively. We believe that this positive change has been brought about by the bottoming out of inventory in the home textile industry (the increase in inventory turnover of listed companies) and the improvement of the management capacity of superimposed companies (the expense rate has dropped by 4 percentage points during the period).

Take advantage of the upsurge of IP consumer goods, more like to transform IP operators. Guojun Textile and clothing team has issued a total of 5 IP consumer goods industry special reports since June, emphasizing that after the upsurge of IP content, IP consumer goods will become the next focus. Duoai is another company to enter the IP and IP consumer goods industry, it will use its own star entertainment resources and rich experience in the production and sales of authorized peripheral products and consumer goods to enter the star IP consumer goods and IP distribution field.

The company has a three-step IP strategy and will make full use of resources and experience to enter the IP field. The company's IP strategy is divided into three parts: 1) the company has been designing, developing and producing legitimate peripheral products for stars such as Li Yuchun and Lu Han, and will continue to expand this business in the future and begin to obtain more star IP resources; 2) will make use of management resources in the pan-entertainment industry to provide secondary distribution for popular TV dramas and cartoon IP 3) on the basis of fully accumulating star IP, making use of its own advantages in consumer goods design, production and sales, develop its own brand IP consumer goods for strong IP.

Risk hint: home textile business growth is not as expected; IP consumer goods business expansion process is slow.