Investment Highlights Q3 performance is generally in line with expectations. The high growth is mainly due to the consolidated table Outfit7. In the first three quarters of 2018, the company achieved operating income of 2.01 billion yuan, a year-on-year increase of 69.3%, net profit of 760 million yuan, an increase of 157.3% over the previous year, of which Q3 achieved operating income of 630 million yuan, an increase of 17.7% over the previous year; net profit of 202 million yuan, an increase of 125.5% over the previous year, net profit after deducting 199 million yuan, an increase of 138.8% year-on-year. We believe that the company's performance is generally within expectations. The high growth on the revenue side is mainly due to the increase in the scope of the company's consolidated statements by Outfit7, the expansion of revenue scale, and accelerated business development. On the other hand, short-term performance pressure is mainly due to the strategic cooperation between Q3 and Ali, which led to a high increase in marketing expenses. The product matrix has been gradually improved, and there is great potential for monetization based on various popular IP derivatives. Outfit7 has dozens of mobile apps in series, such as “My Tom Cat,” “My Angela,” “My Hank Dog,” and “Talking Tom Cat”. The main end users cover dozens of countries and regions around the world, including the US, the UK, Russia, Brazil, and China. The total number of downloads of the “Talking Tom Family” series of mobile apps exceeded 8 billion times, and the number of monthly active users worldwide exceeded 400 million. During the reporting period, the company actively promoted the extension of the “Talking Tom Family” IP industry chain. Among them, the “Talking Tom Cat Family” IP was extended. Yudian opened two stores together, adding 39 The IP spawned peripheral products, teamed up with Tencent's children's platform, Penguin Fairy Tales to launch the “Talking Tom Family” audio storybook series, etc. In the future, based on IP, it is expected to achieve comprehensive and three-dimensional expansion in early childhood education, movies and animation, derivatives development, and Tom Cat theme parks. The synergy effect with Hangzhou Zhexin is remarkable, and all-round cooperation in markets, customers, and technology has helped unleash performance. Subsidiaries Tom Cat Network, Tom Cat Investment, Hangzhou Zhexin, and Outfit7 have obvious synergistic effects in terms of markets, customers, and technology. In the future, it is expected to promote collaboration within the organization, vertical control, and horizontal integration, accelerate coverage of the entire business chain, enhance the full life cycle of products, and collaborate in the fields of R&D, distribution and operation of mobile Internet applications and IP expansion. The significant synergy effect is mainly based on: 1) Market side: it is expected that collaboration at home and abroad will be achieved to reduce promotion and production costs, and facilitate diversified IP monetization; 2) Customer side: customer resources will be cross-used to achieve high-quality customer resource sharing, enrich value-added service content, and create new profit growth points; 3) Technical aspects: It helps the company improve existing data analysis systems, and use Outfit7's accurate user analysis capabilities and marketing experience to comprehensively expand and upgrade the company's entire business industry chain. Maintain the “Overweight” rating. Based on the game industry situation and the company's progress in the IP derivatives industry chain, we have adjusted our profit expectations to a certain extent. We expect the company's net profit from 2018-2020 to be 1,060 million, 1,354 billion, and 1,658 billion yuan respectively, corresponding to EPS of 0.54, 0.69, and 0.84 yuan, respectively, and corresponding to the current stock price PE of 12, 9, and 8X respectively. Considering the continued layout of the company's mobile Internet, we are optimistic about the company's long-term development prospects and maintain the “increase in holdings” rating. Risk warning: risk of weakening downstream demand in traditional business; risk of increased competition in the mobile game market; risk of Tom Cat IP derivative operations falling short of expectations; risk of impairment of goodwill;