Key investment events: The company announced a foreign investment plan: RMB 13.4 million to subscribe for 21% of the shares of Tianjin Liao Preferred Network Technology Co., Ltd. (cross-border e-commerce); 55 million to invest in Chongqing Yidong Technology Co., Ltd. 40.73% (drone); 90 million to invest in 48% of the shares of iSpace (high-end electronic offline sales channels); and 100 million yuan to invest in 21% of the shares of Beijing United Win-Win Advertising Co., Ltd. (advertising). Comment: This investment involves cross-border e-commerce, drones, offline channels, advertising, etc., and previously invested in wearable devices such as VR, mobile healthcare, watches, etc., and the market may think that the company's foreign investment scope is broad and unfocused. We believe that the contact OS is a low-profile version of the Apple ecosystem, aimed at building its own hardware+software ecosystem: 1. This acquisition includes e-commerce, Apple's high-end electronic offline channels, and advertising, all of which are strategic considerations for the company to strengthen its own channel ecosystem. Contact Choice (online channel) +iSpace (Apple's high-end electronics offline store channel) broadens the company's channels for smart hardware such as VR and wearable devices. Furthermore, the company's previously planned smart hardware flagship store in Wangjing also has the same strategic thinking. Joint win-win (advertising) can strengthen channel monetization capabilities for the advertising+gaming business that the company is currently focusing on, and is an integral part of improving ARPU's goals. 2. Long-term considerations and frequent deployment of intelligent hardware are essentially the company's graft of its communication OS from mobile phones to the broader smart hardware market. At present, the company has developed VR OS and OS for some wearable devices. The future is to build a hardware+software service ecosystem centered on connecting OS. 3. From a financial point of view, the company currently focuses on asset-light business. It does not require much capital investment except for research and development. Currently, it has 5 billion dollars in cash (only a small amount of short-term debt), and investment in drones+wearables in emerging industries representing the general direction of future smart hardware is a reflection of the company's management's forward-looking ideas. In terms of performance, endogenous growth was 91% in 2015. The impetus for strong growth was partly due to the continuous expansion of the number of users. In 2015, the number of active users of the Contact OS was increased by 140 million, an increase of 68.67%. By the end of 2015, the cumulative number of users of the company's products had reached 659 million; on the other hand, due to the increase in ARPU value, the company's connected OS operating system and other proprietary applications are currently in a period of accelerated monetization. Among them, the game market is the biggest highlight of future ARPU value increases. The company has carried out in-depth cooperation with leading platforms at home and abroad, including WeChat, and has successfully operated a variety of high-quality game products since 2015, and is becoming a large-scale game incubator, with tens of times more market space in the future. Profit forecast and valuation: In terms of performance, the company occupies an important “entrance” to the mobile Internet, and there is huge room for domestic and overseas business growth. Net profit is expected to maintain 100% compound growth from 2016 to 2017. In terms of strategic layout, the company's management has an international perspective, excellent investment vision and ecological philosophy, and is actively building a “connected OS ecosystem” of system+intelligent hardware+software+services. After transferring the share capital, we expect the company to give the company a “buy” rating of 0.28 yuan, 0.51 yuan, and 0.81 yuan of EPS after dilution from 2016 to 2018! Risk warning: advertising+gaming business growth falls short of expectations, overseas business development falls short of expectations, smart home platforms are progressing slowly