The company intends to purchase 100% equity of Zhangshi Yitong, 60% equity of Jingshi Culture, 100% equity of Bangfu Software and 85.61% equity of Manyou Culture by privately issuing 134 million shares to specific targets and paying cash. The total transaction price is 2.79 billion yuan, and the price of issuing shares is 13.68 yuan per share. At the same time, it is proposed to raise no more than 920 million yuan from the non-public offering shares of no more than 10 specific investors at the base price of 12.31 yuan per share, all of which will be used to pay the consideration of this transaction. The relevant trading parties have made promises on the performance of the above trading objects: from 2014 to 2016, after deducting non-destructive profits, the value of Yitong is 90.35 million yuan, 117 million yuan and 159 million yuan respectively, and that of intensive culture is 60 million yuan, 80 million yuan and 100 million yuan, respectively. Bangfu software is 50 million yuan, 72 million yuan, 96 million yuan, and cartoon culture is 27 million yuan, 35 million yuan and 50 million yuan respectively. The combined profits of the four are 227 million yuan, 304 million yuan and 405 million yuan respectively.

Through the acquisition of sub-industry leaders, enter the strategic implementation stage: from the point of view of the acquirer of the company, each target is the leader of each sub-industry. Palm Yitong is the leading video content marketing and promotion platform for domestic operators, Jingshi Culture is the second largest building elevator advertising provider in China, and Bangfu Software is the leading enterprise in the field of public opinion research and information services. comic book culture is the leader of cartoon enterprises. The above acquisition of the company is in line with the strategic transformation of the Development Strategy Planning outline announced by the company in early February 13, which clearly proposes to grasp the changing trend of networked and mobile information technology. adhere to the general idea of "sustainable development advantages, vigorously expand new media, and rely on the two ways of" internal resource integration "and" external incubation mergers and acquisitions "to realize the strategic orientation of" all media "and" big culture ". The Shiyitong and Manyou culture acquired by the company will help the company enter the field of animation and mobile video, which will further enrich the company's all-media content platform and boldly enrich the development of the integration of traditional and emerging media for the company. in order to enrich the territory of the company's media business and promote structural upgrading, the acquisition of Bangfu software will help Huawen Media win more government, enterprise and industry customers. On the other hand, the intensive culture will enhance the advertising value of the company's media resources, and these acquisitions provide an opportunity for the company's gorgeous transformation.

The acquiree raises the future valuation of the company: at present, the company has two main businesses, some of which are related to urban gas, mainly exclusively responsible for gas pipeline construction and pipeline gas supply business in Haikou City, and the income is relatively stable. the average annual operating income is about 600 million yuan, and the average gross profit margin is about 20%. The other part is communication and culture. it is mainly the newspaper business and advertising design agency business such as Securities Times, Huashang Daily, New Culture News, Huashang Morning Post, Chongqing Times and other subsidiaries such as Times Media and Chinese Business Media, which is also the main source of income and profit for the company at present. Traditional print media due to the rapid development of online media in recent years, its development situation will not be much better, so that the current valuation level of the company is far lower than the industry average and median. Through the acquisition of the four companies, are currently highly valued video platform, advertising, animation and software industries, and are the leaders of the segment, coupled with its promised performance contribution, the company is expected to become a new media business-based listed media leading company, not only to ensure that the future performance will be improved to a certain extent, and is expected to improve the company's existing valuation level.

Profit forecast: the company is currently the comprehensive communication group with the widest coverage of communication channels and the most complete license in China. As the only cultural media listing platform under China Radio, Film and Television, it has a scarce overseas Internet TV penetration channel, and with the trend of SARFT's policy on Internet TV business, it highlights the value of integrated broadcast control license and enhances the company's future focus. We expect the acquisition of four companies, including Zhangzhang Yitong, to be completed in the fourth quarter of 14, and for one quarter, we estimate that the EPS for 2014-2016 will be 0.56,0.42 and 0.53 yuan respectively, corresponding to 25X, 33x and 26x, respectively. We give a "recommended" rating for the first time.

Risk hint: the performance of the company integrated by epitaxial acquisition is not up to expectations, and the process of asset restructuring is not smooth, which leads to miscarriage and approval risk.