Investment highlights: events. The company released its 2017 three-quarter report. In the first three quarters, the company achieved revenue of 684 million yuan (+54.89%), net profit to mother of 302 million yuan (+101.17%), and deducted non-net profit of 138 million yuan (+107.95%), in line with expectations. Among them, with 2017Q3, the company achieved revenue of 333 million yuan (+33.39%) and net profit to mother of 207 million yuan (+97.98%). The company expects to achieve net profit of 342-437 million yuan for the full year of 2017, a significant increase of 80%-130% over the previous year. The volume of the derivatives business is combined with real interest, and the revenue side continues to grow rapidly. In the first three quarters, the company's revenue side increased sharply by 54.89% year on year. We expect that, on the one hand, IP derivatives will maintain a rapid growth trend due to continued growth in overseas demand, increased channel performance, and initial results in the domestic derivatives market; on the other hand, the overall animation game sector will grow rapidly. At the same time, it is expected that the company's comprehensive gross margin will increase by 3.95PCT to 43.36% month-on-month due to an increase in the share of high-margin gaming business. (Since March 2017, Zhenqu Network has consolidated revenue of 93 million yuan, net profit of 27 million yuan, and net profit of 28.8% as of the semi-annual report). Profitability has increased in the main business and is driven by investment income, and profitability has improved significantly. In the first three quarters, the company's sales/management/ financial expense ratios were 4.21%/12.46%/1.93%, respectively, compared with -2.91/-4.35/+1.93PCT in the same period last year. Among them, the sharp increase in financial expenses was mainly due to an increase in interest expenses in the current period. Since the beginning of the year, the company has achieved investment income of 187 million yuan, accounting for 54% of total profit, mainly income from financial management and equity transfers in its subsidiaries, which has driven high performance growth to a large extent. Due to the increased profitability of the main business and a significant increase in investment income, the company's net sales margin increased 9.67PCT to 43.36% over the same period last year. The world's leading IP derivatives monetization platform is ready to launch, and rapid growth in performance can be expected. After years of layout and development, based on the two strong sectors of derivatives and self-media, the company actively explores upstream and downstream and industrial chain extensions, and has basically built a closed-loop industrial chain ecosystem of “own IP+ content production+content distribution and operation+new media operation+derivatives development and design+online/offline retail channels”. After the fixed increase was completed last year, the company's strategic layout to build an IP cultural ecosystem accelerated. It successively acquired Zhenqu Network to complete traffic and promotion, and invested 19.5% of JAKKS, the third-largest listed toy company in the US, to become its largest shareholder. Qiangqiang jointly shared the world's top IP (Disney, Marvel, Nintendo, etc.), strengthening IP derivatives R&D, design, and supply chain organization capabilities. We judge that the company will continue to lay out in the industrial chain in the future to achieve the goal of being internationally leading in all aspects of IP, R&D and design, manufacturing, and channels, and help the company become a leading global IP derivatives monetization leader. Profit forecasting and valuation: With the gradual improvement of the business layout, the company's strategic layout has become more clear, gradually reaching the international first-tier level on the IP, R&D, manufacturing, and channel side, and the prototype of the world's leading IP monetization platform is ready to emerge. Net profit is expected to be 420 million yuan and 631 million yuan respectively in 17-18, an increase of 121% and 50% year-on-year, and the corresponding EPS is 0.46/0.69 yuan/share, respectively. The company was given 32 times PE in 2018, corresponding to a target price of 22.08 yuan/share, maintaining the purchase rating. Risk warning: termination of brand image authorization; exchange rate risk, insufficient effective integration of foreign investment project resources or lower performance than expected; poor connection between IP image and monetization channels.