Performance review In the first three quarters of 2017, the company achieved operating income, operating profit, and net profit attributable to shareholders of listed companies of 1,336 million yuan, 153 million yuan and 128 million yuan respectively, up 14.62%, 20.81% and 11.22% year-on-year respectively. Achieve full dilution of EPS of 0.13 yuan/share, in line with expectations. Net cash flow from operating activities was -27.3579 million yuan, lower than net profit for the same period. On a quarterly basis, the company's Q1/Q2/Q3 revenue growth rate was 14.27%/16.33%/13.49%, respectively, and net profit growth rate was 9.63%/6.46%/12.51%, respectively. The company expects net profit of 151 million yuan to 197 million yuan for the full year of 2017, an increase of 0% to 30% over the previous year. Business analysis, revenue growth has reached a record high, and profitability is relatively stable. In the first three quarters, the company's revenue continued to grow (+14.62%), setting the highest revenue growth rate in the first three quarters since listing. Gross margin increased slightly to 32.82% (+1.65pct.). The fee rate for the period increased by 0.94pct. Among them, the sales expense ratio and financial expense ratio have both increased (0.82pct./0.31pct.) , the management fee rate fell by 0.18pct. The increase in sales expenses was mainly due to the merger of Schumil and promotions. The net profit margin was 9.59% (-0.27pct.). The impact of used refurbished pianos is starting to weaken, and the company's piano production capacity will increase in the future. The import of used refurbished pianos is one of the main impacts on domestic high-end piano brands. Over the past 10 years, they have maintained annual growth of more than 40%. According to last year's customs import and export data, since 2016, there has been a negative increase in the number of imported used pianos. At the same time, due to the country's environmental protection and high pressure, many small piano manufacturers are restricted from using paint. Benefiting from this, as the world's largest piano manufacturer, the company's revenue growth rate reached a record high. The relocation of the company's Zengcheng plant is progressing smoothly. It is expected to be completed by the end of the year, at which time the production capacity will reach 150,000 units per year. After completing the acquisition of Schimmel (Schimmel) in Germany, the company continued to promote the restoration of its production capacity. The company can further strengthen its position in the industry while boosting the high-end piano business and increasing the overall level of profitability. On the other hand, the company promotes deep integration of the Internet +, builds a cloud service platform, creates a leading “piano service on the cloud” ecosystem, and establishes a closed loop in the company's “manufacturing-rent-sale-service-education” industry chain, which is conducive to improving service levels and product added value. The diversified development of art education is progressing smoothly. The company continues to combine the development of smart instruments and intelligent teaching app modules, and continues to promote art education brand activities such as art classrooms and super partners. In the first half of the year, the company used 368 art education franchisees to complete coverage in 29 provinces across the country. At the same time, the company also completed the opening of cultural and art education centers in Jinan and Foshan, and the Beijing Art House is also in the final stages of construction. In the next 2-3 years, the company will also accelerate the layout of art education centers, drive community stores through direct-run stores, and form a nationwide franchise network. Art education will become an important business growth pole for the company in the future. The reform of state-owned enterprises has made progress. On June 13, the company announced that its holding subsidiary, Amoeson, was included in the first batch of mixed ownership employee shareholding pilot enterprises in Guangdong Province; on July 6, the company announced that Amosun plans to issue 8.41 million additional shares through capital increases and stock expansion to introduce strategic investors, management and core employees; on September 14, the company announced that Amosun plans to apply for a new third board listing. Judging from the development experience of developed countries such as Europe and the US, the size of the digital musical instrument market is far larger than that of traditional musical instruments. However, at present, the annual production of digital musical instruments in China is about 1 million units, which is significantly lower than traditional instruments, and there is plenty of room for expansion in the future. Amoeson is currently able to produce 40,000 digital pianos. This application for a new third board listing will expand financing channels to accelerate enterprise development and lay a solid foundation for building a closed loop of O2O smart instrument ecology of “terminal+platform+content”, thus driving the company's revenue growth in the digital piano business. Risk factors The risk that the progress of the fund-raising project falls short of expectations; the risk of increased competition in the piano manufacturing industry; the management risk of the expansion of the cultural industry; and the risk of approval of this non-public offering. Profit forecasting and investment recommendations The company actively extends the cultural education industry on the basis of strengthening the main piano business, while grasping the post-piano service market and building a closed loop in the “manufacturing-rent-sale-service-education” industry chain to achieve the company's strategic goal of strengthening the main piano business and expanding the cultural industry. We maintain the company's 2017-2019 EPS forecast at 0.17/0.21/0.26 yuan (three-year CAGR 18.7%), and the corresponding PE score is 84/69/56 times, maintaining the company's “buy” rating.