The 3Q10 results were in line with expectations: the company achieved operating income of 1.55 billion yuan in the first three quarters, a year-on-year decrease of 4%; realized net profit of 144 million yuan, corresponding to earnings per share of 0.13 yuan, a year-on-year decrease of 15.1%, in line with our expectations during the preview of the interim report. The main reason for the decline is the decline in revenue from newspapers and advertising businesses. Positive: The book distribution business is growing steadily. During the reporting period, the company obtained overall distribution rights for secondary vocational schools in Shanghai. Coupled with adjustments and optimization of existing book distribution outlets, book distribution revenue growth was relatively steady. Actively build a digital content distribution platform. Through the establishment of a digital publishing business company, the company launched its own brand reader and online digital content distribution platform “Xinhua e-Store”, and also cooperated with traditional domestic publishing companies (Times Publishing), with a view to leveraging the synergy of “digital distribution platform+superior content resources”, laying the foundation for the company's transformation to a digital distribution platform. Negative: • Revenue from newspapers and advertising businesses declined. On the one hand, due to restrictions on new real estate and property market policy regulation during the Shanghai World Expo, real estate agent advertising declined; on the other hand, since Xinmin Media's advertisements did not merge reports until April 2009, the company's current newspaper advertising revenue declined. Investment returns are highly volatile. During the reporting period, the company confirmed investment income of 34.8 million yuan, an increase of 407% over the previous year. Mainly, trust investment income was nearly 26 million yuan, accounting for nearly 20% of net profit. Development trend (1) In the second half of the year, the company's book distribution business is expected to remain stable, and there is uncertainty about the newspaper advertising business being affected by fluctuations in industry prosperity, especially real estate advertising. (2) The company previously announced the acquisition of the Shanghai Chengcheng Project. Investing in cultural real estate projects may have a positive impact on next year's performance. Valuation and recommendations: Considering the decline in newspaper advertising, we lowered the company's 2010 performance to 0.20 yuan, while keeping the 2011 earnings per share unchanged at 0.26 yuan. The current stock prices corresponding to the 2010-2011 PE are 50x and 39x, respectively. It is in the middle to high end of media sector valuations, maintaining a neutral rating.