In 2011, the company realized operating income of 2.111 billion yuan, down 8.52% from the same period last year; realized net profit of 180 million yuan belonging to shareholders of listed companies, down 9.91% from the same period last year; and realized net profit of 66 million yuan after deducting non-recurring profits and losses belonging to shareholders of listed companies, down 57.86% from the same period last year.

In the first quarter of 2012, the company achieved operating income of 396 million yuan, down 11.53% from the same period last year; net profit attributed to shareholders of listed companies was 26 million yuan, down 36.22% from the same period last year; and earnings per share was 0.025 yuan.

A sharp decline in advertising newspaper business is a drag on overall performance. The company's advertising newspaper business was affected by increased competition, with operating revenue falling by 22.38% and gross profit margin falling sharply to 27.37% from 39.42% in the same period last year. The operating income of the audio-visual products business fell by 17.27%, and the operating income of the book business dropped by 0.1%. The operating income of stationery business increased by 1.66%.

The impact effect of new media begins to appear, and the pressure of traditional publishing transformation is urgent. The company's traditional business is under great pressure, and the book and advertising newspaper business, which accounts for the largest proportion of revenue, has begun to grow negatively, and the transformation is imminent. The successive introduction of cultural industry support policies will bring opportunities for transformation, and the theme of 2012 will still be transformation.

It is estimated that the company's earnings per share from 2012 to 2014 are 0.11,0.09,0.10 yuan respectively, and the dynamic price-to-earnings ratio relative to the current stock price is 63,77 and 70 times respectively. The company's traditional business is facing a decline, but new business still needs to be cultivated and is given a neutral rating for the first time.

Risk hint: the progress of new business transformation is lower than expected.