On the evening of October 25, 2010, Xinhua Media issued a series of board announcements: 1. The company invested 1.32 billion yuan to acquire 70% of Shanghai Chengcheng's shares. Chengcheng Company invested in the development of a commercial property with a planned construction area of 281,900 square meters at the junction of Wuzhong Road and Hongjing Road in the Dahongqiao area. Currently, it is in a state of disrepair due to various reasons; 2. The company plans to increase the capital of Evening News Media with 100% equity capital increase in Jiamei, so the company will hold 34% of Evening News Media's shares and become its controlling shareholder through acquisition and capital increase in Shanghai; 3. The company plans to invest 34% of Shanghai News Media's shares through acquisition and capital increase in Shanghai. Oriental fusion culture Business Co., Ltd. (the company mainly operates Oriental Culture Card business). After the capital increase, the company will hold 46% of the shares; 4. With Shanghai Wanlian E-Commerce Co., Ltd. and Shanghai Chengshitong Information Technology Co., Ltd. jointly invest in the establishment of an original literature publishing and media company, tentatively named Shanghai Wenwu Chunqiu Books and Media Co., Ltd., the company holds 40% of the shares; 5. The wholly-owned subsidiary Xinhua Chain invested 4.5 million yuan to establish a joint venture with Shanghai Haojin Property Management Co., Ltd., a subsidiary of Xinhuanling Group. The company holds 45% of the shares in the chain. Telecom Tianyitong franchise stores have been set up in some stores. Comment on the acquisition of large-scale properties in the Dahongqiao area to build a large-scale cultural life center and enhance the company's inherent value: (1) The company obtained a property with a current planned construction area of 281,900 square meters in the Dahongqiao area at a lower cost of 1.32 billion yuan, which is the result of the active operation of the company's new management in less than a year. Considering the follow-up investment required by the company, the total investment is estimated to be 2.62 billion yuan, and according to current development needs, the total planned construction area will increase to about 350,000 square meters, and the unit cost will be less than 7,500 yuan/square meter. According to the current sales price estimates of 25,000 to 30,000 yuan/square meter commercial property in the Dahongqiao area, the acquisition of this project will bring the company an increase in intrinsic value of at least 4 billion yuan or more in the future, equivalent to 4 yuan/share. (2) Shanghai is currently focusing on building the Hongqiao business district centered around the Hongqiao transportation hub area. With convenient transportation integrating aviation, high-speed rail, and expressways, it is planned to build it into a convention and exhibition center facing the Yangtze River Delta, an international high-end commercial center, an international business center, and the Shanghai International Trade Center. The Greater Hongqiao region will become a new fulcrum carrying the western growth pole in Shanghai's future plans. In this context, the acquisition of the Chengcheng project will provide a new support point for the company's future long-term development. Judging from foreign experience, large cultural malls often perform well in large cities with high consumption levels. (3) The Chengcheng project will be built into a new large-scale cultural mall business format. The company will use the project to build a large-scale cultural life center. According to plans that may be adjusted, it is estimated that at least 30% of the planned construction area of 350,000 square meters will be used for core cultural business operations, including cultural media businesses such as bookstores, exhibitions, film and television, amusement, and performing arts. At the same time, the remaining 70% of the area will be leased to other “pan-cultural” brands for cooperative operation and rent. On the basis of strengthening the cultural characteristics of the project, the company will enhance property value around the main media business, promote the transformation of the company's business model, form a new profit growth point for the company, and provide a guarantee for the transformation of the company's traditional media business. Increase capital for evening news media and improve the newspaper management industry chain: Realize the integrated operation of newspaper management and advertising agencies, form a complete newspaper management industry chain, and build a new integrated business model with all-round marketing as the core. The injection of evening news can effectively enhance the company's profitability. At the same time, this move helps to explore deep-water areas of cultural system reform in newspapers and media, and lays the foundation for further deepening the reform of its newspaper media culture system and the upstream and downstream integration of the industrial chain. Set up an original literary publishing and media company to extend to the upstream content field: The establishment of this company obtains core resources for digital publishing through resource integration and external cooperation to solicit original works from the Internet, copyright licenses from copyright holders, and planning and organizing market-oriented creative methods. It is closely linked to the company's own digital reading operation platform strategy, and the content and channels promote each other. Enrich business formats and promote the development of the cultural industry. Relying on the resource advantages of the Xinhua Chain and Junling Group, Shanghai Junling Co., Ltd. was established as a joint venture to set up Telecom Tianyitong franchise stores in some stores of the Xinhua chain to enrich the business format of bookstores and effectively use bookstore resources to achieve better profits; integrate cultural resources to expand the cultural prepaid card business through the acquisition and capital increase of Shanghai Oriental Huirong Culture and Business Co., Ltd., to further promote the development of the cultural industry. At the same time, good cash flow from the prepaid card business will also provide financial support for the development of the company's overall business. Investment recommendations This announcement involves projects that will not have an impact on the company's performance in the short term. We maintain the company's profit forecasts of 0.292 yuan, 0.338 yuan, and 0.377 yuan per share for 2010-2012. The company's current series of investment companies has fully demonstrated the determination and major initiatives to promote the positive transformation of the main business after the new management took office. The low-cost acquisition of the Chengcheng project will bring a very significant increase in intrinsic value to the company. Based on this, we maintain our “buy” rating and raise our target price for the next 6 to 12 months to 14-15 yuan.