Matters: The company issued an announcement on March 29 to transfer 70% of Lehui World's shares at a price of 31.72 million yuan to its original shareholders. The company will no longer pay the second round of equity transfers that originally acquired Lehui World's shares, and the former shareholders of Lehui World will no longer carry out performance promise compensation. Key Opinion 1. Will timely and peaceful disposal of non-performing assets benefit other business development? Due to the worsening of Lehui's global operations, future profits will be difficult. The company's timely disposal of this non-performing asset will avoid dragging down performance in the future, which is conducive to concentrating on developing the main business. After the equity disposal, the share transfer amount of 222 million yuan that has not yet been paid to the original shareholders of Lehui World will be confirmed as 2016 non-operating income, resulting in an additional net profit of about 190 million yuan after tax this year. 2. Strong alliances. Is the company's drone cooperation with Zero Intelligent Control and Tencent worth looking forward to? Zero-degree intelligent control and DJI, which the company cooperated with, were born in the same era. The core technology of drones is comparable. As time passes and capital helps, the gap between the two will gradually narrow. At the beginning of this year, the company reached a strategic cooperation with Tencent. The portable drone Aerial Film Ying, developed jointly by the two sides, has now been officially released and is expected to go on sale in the middle of the year. The drone companion app is expected to enable the WeChat or QQ drone community to share aerial content with one click, which will bring social functions to it and help build a drone ecosystem. 3. The market space for robots and consumer-grade drones is vast, and the company has unlimited potential. According to IFR forecasts, by 2020, the number of robots owned will exceed 15 million units, and the scale of the industry will reach 1.5 trillion US dollars. China, as the largest demand for robots, will be full of opportunities for the company to actively transform the robot integration business. In the case of consumer-grade drones alone, all camera users are potential customers of drones. Comparing the annual shipment volume of cameras of up to 100 million units, assuming an average price of 4,000 yuan for drones and a 30% penetration rate, the annual consumer drone hardware market could reach 100 billion dollars. 4. Investment recommendations However, as the expansion and transformation of the Internet cafe game peripherals business accelerates, we expect the company to achieve net profit of 340 million yuan (including profit from non-operating income) and 200 million yuan in 16/17, corresponding to 30 times PE and 51 times, so we give careful recommendations. 5. Risk Warning: Gaming Peripherals Business, Robotics, and Drone Markets Are Expanding Less Than Expected