Performance is generally in line with expectations 1) The company released its 2016 quarterly report: it achieved operating income of 223 million, an increase of 81.9% over the previous year; net profit attributable to listed companies was 972.72 million, an increase of 62.8% over the previous year. 2) The company plans to increase the capital of Shanghai Cilu Network by 6 million yuan and hold a cumulative total of 20.6% of the target shares. 3) The company signed an “Share Subscription Agreement” with Dehaier to subscribe for 11.11 million additional shares of common stock issued by Deheil at a price of $1.80 per share in cash, accounting for 64.2% of the shares of the target company. At the same time, it obtained 1 million stock warrants from Dehaier, and the exercise price was 2.2 US dollars/share. Trends 1. Net profit maintained strong growth of 62.8%. App distribution revenue grew rapidly year over year, driving strong revenue growth. As a result of the arrival of fixed increase funds, the monetary fund situation improved markedly. As of the first quarter, there was 3.5 billion dollars in cash on the account. The company expects net profit from January to June 2016 to increase by 31-43% year-on-year. 2. The dual wheel of merchant cloud search+game interconnection drives the continued strong growth of endogenous growth. The company has been in the game intermodal business since 2015. Adhering to the idea of platformization, the company selects and targets high-quality mobile games based on massive user screening. In October 2015, the two games “Escaped to the Three Kingdoms” and “Fight for Heroes Every Day” were launched on iOS Store and Tencent's App Store, respectively. At the beginning of 2016, “Doraemon Racing” signed an exclusive agency agreement with Tencent, demonstrating the company's strong ability in game development and operation. 3. Epitaxial expansion continues to consolidate the smart hardware ecosystem. In 2015, the company successively invested in American virtual reality company Avegant, Internet of Things interactive technology provider eSmartTech, mobile phone accessories provider Cool Energy Technology, and Internet financial platform Quintech, etc., and acquired 64% of Dehair Healthcare's shares, and continued to advance its business layout in the direction of smart wearables, smart homes, car networking, smart healthcare, VR, and Internet finance. It is expected that the company will launch several of its own smart hardware products one after another this year. At the same time, a fixed increase of 4.8 billion dollars has already arrived, and major extended mergers and acquisitions in the field of smart hardware are worth looking forward to. The profit forecast is based on the interactive platform-based business layout and the broad space of the smart hardware ecosystem. The 2016/2017 EPS is expected to be 0.27 yuan/0.35 yuan (all after exclusion), respectively, an increase of 83%/31% over the previous year. The valuation and proposed current stock price corresponds to the 2016 price-earnings ratio of 74 times, maintaining the “recommendation”, and the target price is 34 yuan (corresponding to the price before exclusions of 86 yuan, corresponding to the 2016 126x P/E). The pace of launch of risky hardware products and game flow fell short of expectations.