In 2016, the company's operating income and net profit increased 8.54% and 10.77%, respectively, and net profit after deduction increased 9.42% year on year. Among them, the company's revenue and net profit for the fourth quarter increased 11.38% and 988.72%, respectively. The sharp increase in profit growth was mainly due to weak sales recovery and effective cost control. The company announced that it plans to distribute a cash dividend of 4 yuan for every 10 shares. The annual report also announced that the profit for the first quarter of '17 increased between 15% and 55% year-on-year. The company's expenses and gross margin were well controlled in 2016. The company's comprehensive gross margin fell 0.29pct year on year, and the period expense ratio fell 0.90pct year on year, of which the sales expense ratio decreased by 1.61pct year on year. The division of labor in the company's management functions caused the annual management expenses rate to rise 1.78 pct year on year, and the increase in interest income led to a decrease in financial expenses. The company's overall operating quality performance was stable throughout the year. In 2016, the company's net cash flow from operating activities decreased by 5.38% year on year, inventory at the end of the year increased by 8.71% compared to the beginning of the year, and accounts receivable decreased by 1.31% compared to the beginning of the year. By the end of 2016, the company had nearly 1,500 direct-run stores. As a sub-IPO with a solid texture, the company is expected to gain broad space by relying on multiple brands and category layouts. In the face of a sluggish market environment, the company's main business has maintained steady growth, leading channels and R&D advantages, and is a rare second-tier IPO in the industry segment. The company's multi-brand and multi-category strategy fits the characteristics of the underwear industry. The multi-brand layout in the underwear field has achieved complete coverage of all market segments, and the multi-category testing in the beauty sector will also lay a good foundation for the company's possible continued expansion in the consumer goods sector in the future. Financial forecasts and investment recommendations We basically maintain our previous forecasts. We expect the company's earnings per share for 2017-2019 to be 0.93 yuan, 1.08 yuan, and 1.26 yuan respectively (the original forecast for earnings per share in 2017 and 2018 was 0.92 yuan and 1.09 yuan, respectively). Referring to the average valuation of comparable companies, the company was given a valuation of 40 times PE in 2017. The corresponding target price was 37.20 yuan, maintaining the company's “buy” rating. Risks indicate market demand risk, multi-brand and multi-category operation risk, inventory backlog risk, and raw material price fluctuation risk