Incident: TV Internet OTT Intermodal Transport Launched in Liaoning. Tongzhou Electronics announced on November 11 that the company and North China jointly intend to sign the “DVB+OTT Project Cooperation and Operation Agreement” and the “Cable Television Overall Transformation Project Cooperation Agreement”. The two sides plan to jointly promote DVB+OTT business operation cooperation based on multi-screen interaction in Liaoning Province, and cooperate on the overall digital transformation project between the Chaoyang Branch and Fuxin Branch of the North Union. The cooperation period is 8 years. At the same time, the company's “National and Local Joint Engineering Laboratory for Three Networks Integrated Multimedia Interactive Technology” was approved by the National Development and Reform Commission. Key investment points The leading position of integrating the three networks has been established, and OTT intermodal transport has been endorsed at the national level. The company's national and local joint engineering laboratory for the integration of multimedia interactive technology between the three networks was approved. In addition to receiving relevant financial subsidies, it also marks that the company's technology accumulation, solutions and industry position in the field of three network integration have been recognized and endorsed at the national level, which is of strategic and substantive significance for the company's promotion of the “1+1 TV Internet” strategy throughout the country. The first OTT intermodal transport project was launched, starting the first shot at transforming equipment vendors into virtual operators. The company and the North jointly signed a DVB+OTT cooperative operation agreement. This is the first implementation of the operating sharing rules after the company held the “TV Internet Household Communication Project” signing ceremony with the top 10 radio and television operators including Xin****hai, Ningxia, and North China on September 23. The signing of this agreement officially marks the company's comprehensive transformation from a radio and television equipment provider to a television virtual operator, and the profit model began to cross borders from equipment sales to service and operation sharing. According to the agreement, the North uses its cable network and promotional channels for program transmission and promotion; while the company is responsible for providing investment in terminal set-top boxes and front-end equipment, and introducing OTT licenses and programs. We believe that this cooperation method, on the one hand, makes use of the existing user resources of cable television operators, the DVB live streaming monopoly, and the inherent economic effectiveness of cable networks, and the economic effectiveness of video transmission inherent in cable networks. It is a fast and effective way to cover TV Internet users, along with Tongzhou Electronics in equipment terminal layout, three-network integrated transmission solutions, platform construction, and long-term deep communication relationships with operators. We expect that at a time when TV screen participants such as Internet companies, telecom operators, and terminal manufacturers are all speeding up the horse race, the win-win cooperative profit model between electronics and radio and television operators in the same continent will be promoted and implemented at an accelerated pace. Adequate user base ensures scale effect. Northern Union is the main body of network integration in Liaoning Province. Currently, there are 9 million cable TV users, and the digital transformation rate is about 70%; furthermore, the network integration in the province is progressing well: currently 14 prefecture-level cities in Liaoning have invested in shares. In 2011, 16 radio and television system shareholders at the provincial and municipal levels in Liaoning signed the “Liaoning Cable Network Joint Restructuring Shareholders' Asset Investment Agreement”, marking the comprehensive progress of network integration in the province. A sufficient number of users and a more unified business promotion plan will lay a good foundation for the company's OTT scale effect. Taking advantage of the channel advantages of Northern Radio and Television, the company is expected to land 500,000 subscribers in Liaoning this year and 1 million next year. Among them, the agreement stipulates that North Union and Tongzhou Electronics will distribute package packages, on-demand movies and TV shows, and OTT advertisements according to 30:70, 40:60, and 50:50 respectively. It can be seen that the company already has a certain bargaining power in platform operations. It is expected that with the accumulation of subsequent user numbers, the voice of the company's platform will be further strengthened. According to the calculation that package packages are not less than 450 yuan/person, business operations in the Northern United Region can bring the company more than 150 million dollars in revenue every year from package package projects alone. Chaoyang+Fuxin tested the waters of “digital transformation+OTT” overall business solutions. The “Cable TV Digital Overall Transformation Project Cooperation Agreement” signed by the company and North China is an extended version of the basic service of the DVB+OTT cooperation program. The Chaoyang branch and Fuxin branch under the Northern Union cover about 800,000 cable TV subscribers. Currently, the digitization process is slower than in other provinces. The “Cable TV Digital Integrated Transformation Project” cooperated with the company can make full use of the company's mature set-top box solutions and the deep relationships it has established in the industry chain to help Fuxin and Chaoyang directly complete the rapid transition between digitalization and dual-line interaction. In this cooperation, the company provides DVB+OTT set-top boxes and overall solutions free of charge. The Northern Alliance subsidizes the company by 8.2 yuan per month for 36 months (that is, it can basically cover the company's set-top box costs within 3 years); in addition, the OTT operation cooperation plan complies with the DVB+OTT sharing model, which can directly contribute revenue to the company in terms of increased OTT value-added business. We believe that this plan not only flexibly meets the needs of cable operators for economic solutions to accelerate digitalization and two-way transformation, but also strengthens the company's control and large-scale coverage of users, and has a certain degree of replicability in regions where digital transformation is progressing slowly. Continued user adoption and scale visibility are the keys to improving valuation. The company's DVB+OTT model has officially been implemented in Liaoning, a major cable television province, and has entered the substantial stage of TV Internet racing. The plan makes full use of the company's equipment, terminals, platform scale, and radio and television communication capabilities, and has win-win characteristics, and can be implemented and promoted at an accelerated pace in provinces where the company has a deep digital television layout. However, when the number of users exceeds 5 million, in addition to the advertising value and traffic import value of on-demand broadcasting, apps, and television, and the Internet, it will also be shown. We maintain our original profit forecast. The company's net profit attributable to the parent company from 2013 to 2015 was 61 million, 182 million and 506 million respectively, up -68.47%, 199.19%, and 177.56% from the previous year; the corresponding EPS was 0.09 yuan, 0.27 yuan, and 0.74 yuan respectively. The value of the company's television and Internet resource integrators is being verified, and continuous user acquisition and coverage expansion is the key to increasing the company's value, so investors are advised to pay active attention.