Incident: Variety Co., Ltd. acquired the Internet Lottery Company. On February 19, the company signed a “Letter of Intent to Transfer Shares” with shareholders of Shanghai Liangcai and Shanghai Haoxuan Company to acquire their shares in the above two companies. Both Shanghai Liangcai and Shanghai Haoxuan are involved in the lottery industry. Among them, Shanghai Liangcai achieved operating income of 38.656 million yuan and net profit of 14.381 million yuan in 2013; Shanghai Haoxuan achieved operating income of 9.8309 million yuan in 2013, and realized net profit of 3.8010,000 yuan. The market size of the lottery industry continues to expand. Paperless is the trend in 2012 lottery ticket sales data. The total sales volume of lottery tickets nationwide totaled 261,524 billion yuan. Between 2006 and 2012, the compound annual growth rate of lottery ticket sales reached 21.35%. Traditional lottery tickets are mainly sold in physical stores. Although they have advantages such as cash transactions and easy prize redemption, they still limit lottery players' purchases in terms of time and place. With the rapid development of the internet and mobile internet, paperless lotteries have gradually become popular. Entering the lottery industry and taking the second step in mobile internet transformation, the company began seeking transformation to the mobile Internet field in 2013. It set up a related subsidiary at the end of last year, and acquired Pocket Flying News, which is involved in the mobile game business, in January of this year. This acquisition is the second step in its mobile Internet transformation and begins to lay out the Internet lottery industry chain. Shanghai Lottery has an advantageous background in the lottery industry, has good cooperative relationships with national lottery and sports lottery organizations, and has leading paperless lottery technology. The lottery software “Zhisheng Lottery” owned by Shanghai Haoxuan has advanced football lottery filtering technology and has the function of increasing the winning rate. The software currently has 182,000 users in China, and users have received a total of 410 million yuan in bonuses. At the same time, it has opened an API interface and obtained cooperative relationships with many domestic lottery websites, and is currently in a leading position in the domestic soccer lottery industry. The profit forecast and valuation estimate that the company's EPS from 2013 to 2015 will be -0.59, 0.24, and 0.41 yuan/share, respectively, corresponding to 53 times and 31 times PE from 2014 to 2015, respectively. Risks suggest that the introduction of national policies fell short of expectations; market promotion fell short of expectations.