1——3Q earnings slightly beat

1——3Q16 revenue was Rmb272mn, up 52.74% YoY; shareholdernet profit was Rmb74.348mn, up 213.27% YoY, or Rmb0.33 pershare. The result was in line with the company's net profitguidance and 3.7% higher than our forecast.

Trends to watch

Sticking to big data strategy, successful deployment fortelecom and broadcast/TV big data entrance, national policybrings benefit.

“Mass vide o + mass ba ndwidth” now the strategy fortelecom and broadcasting/TV operators, positive to Starcor.

Earnings forecast

We maintain our earnings forecast for FY2016/2017.Weexpect 2016/17e net profit attributable to shareholders to beRmb119mn/Rmb146mn （+66.6/22.1%）。

Valuation and recommendation

The stock is trading at 46x 2017e P/E. We maintain our BUYrating and Rmb36.17 target price, implying 25.16% upside roomfrom the current price. The TP implies 57x 2017e P/E.

Risks

Slow progress in telecommunication big data, monetization ofbig data disappoints; fierce competition in deep packetinspection market, leading to lower gross margin.