Incident 1. Chengdu Jinya, a wholly-owned subsidiary of the company, transferred 34.99% of its shares in Minghe to the company free of charge. At the same time, the company increased Minghe's capital by 57.6 million yuan. After completing the equity transfer and capital increase, the company will occupy 51% of Minghe's shares and become its controlling shareholder. Minghe Minghe and Beijing Rong Han, a joint venture with Northern New Media, are the sole operators of GTV Game Sports Channel. 2. Minghe Ming and its wholly-owned subsidiaries Minghe Film and Television and Hongxun Hongyuan each invested 4665/33.35 million yuan to acquire a total of 60% shares in the sacred site of Yinchuan (35% of Minghe and Hongxun Hongyuan, 25%). Yinchuan Shengdi is the permanent host of the WCA (World eSports Championship). 3. The company purchased 100% of Tianxiang Interactive's shares by issuing shares and paying cash: Tianxiang Interactive's price was 2.2 billion yuan, the 2015-2017 performance ratio was 2.2/2.64/317 million yuan, respectively, and the acquisition of PE was 10/8.3/6.9 times. In terms of transactions, the company plans to issue 87.94 million shares (issue price is 1,376 yuan/share) to He Yunpeng, Chen Chen, Zhou Xuhui, Zhang Pu, Meng Kun, Zhou Xingyou, and Du Wei and pay 990 million yuan in cash (of which 550 million is to raise supporting capital for the non-public offering of 43.17 million shares from Zhou Xuhui and He Yunpeng, with an issue price of 1,274 yuan/share). After the transaction was completed, the company's total share capital was changed to 397 million shares. Tianxiang Interactive is mainly engaged in the development and operation of mobile games. Our point of view. 1. Holding Yinchuan Shengli and Minghe Minghe, laying out WCA and GTV, the core of the e-sports industry chain, and opening up a broad space for imagination, Yinchuan Holy Land is the permanent organizer of the World eSports Competition (WCA). It is mainly responsible for hosting and promoting international e-sports contests, organizing training for e-sports players, and setting up individual studios for outstanding players. WCA started in 2014 and is the most influential global e-sports event in the world. The competition events cover PC games, mobile games, page games, etc., with many events and a wide audience base. Minghe Minghe and Beijing Rong Han, a joint venture with Northern New Media, are the sole operators of the GTV Game Sports Channel (Game TV). They produce thousands of hours of excellent TV program content every year, including game competition broadcasts, game news information, exciting game feature films, game themed TV short dramas, etc., and maintain close cooperation with well-known domestic game companies and world-renowned IT companies. Referring to the sports industry, the model of Yinchuan Holy Land plus Minghe Minghe Minghe is similar to the Olympic system: Olympic Organizing Committee+Olympic Broadcasting Service Company. The Olympic Organizing Committee is responsible for the overall operation planning of the Olympics, while the Olympic Broadcasting Service Company is responsible for content production and copyright distribution, etc.; in contrast, Yinchuan Shengdi is the operator of the WCA (e-sports Olympics), and has strong capabilities such as content production. By controlling Yinchuan Shengdi and Minghe, the company has essentially mastered the operating rights of WCA and GTV, and has achieved copyright and operational cards for top tournaments at the core of the e-sports industry chain, opening up a broad space for imagination: WCA is currently one of the few international e-sports events with good operation, inheriting the original WCG CEO team, and is rapidly expanding its brand effect; GTV is one of the only two game competition channels with legal licenses in China, and both are extremely scarce! WCA and GTV will bring huge hidden and explicit commercial value to the company. The WCA brand takes the lead, which will greatly drive future commercial monetization: game operation and distribution, tournament sponsorship, content copyright, tickets, various types of advertisements, carnivals, derivatives, etc. 2. The acquisition of Celestial Interactive and enhancing the company's game development capabilities will also greatly enhance the company's profitability level. Tianxiang Interactive was founded by He Yunpeng, the former vice president of 91 Wireless, in 2014. It has five subsidiaries including Red Moon Technology, and has produced many successful cards and shooters, such as the “National Baby” series, “Three Kingdoms Enhanced Edition”, “The Battle of the Three Kingdoms”, “Battle of the Sun” series, etc., with a total of 40 million registered users. CEO He Yunpeng has 17 years of experience in the software and Internet industry. He has hosted and established 91 wireless game teams. His combination of business strength and industry contacts is a strong guarantee for achieving gambling performance. The company's original main business mainly focused on digital television software and hardware, and has also entered the field of video games through investment and equity, etc., and has always been committed to building a “pan-home Internet ecosystem.” On the one hand, the acquisition of Tianxiang Interactive will enhance the company's game research and development capabilities. On the other hand, Tianxiang Interactive's 2015-2017 gambling performance will be 2.2/2.64/317 million yuan, which will greatly enhance the company's profitability. 3. The three targets will form collaboration, which is conducive to improving the layout of the industrial chain, opening up flexible performance space and celestial interaction as developers, and integrating businesses such as vertical media, game distribution and operation, e-sports content production, and television channel operation. Yinchuan Holy Land's main business is e-sports event operation and game investment (WCA). After the integration of the three targets, collaboration will be formed. On the one hand, the company's industrial chain layout will be improved, and on the other hand, the WCA brand effect will be used to open up flexible performance space for the company: it is expected that breakthroughs will be achieved in terms of sponsorship, advertising, copyright, tickets, carnival events, peripheral derivatives, game distribution, etc. as WCA's popularity opens up, and there is plenty of room for performance flexibility. Profit forecast and rating We estimate that excluding extension, the company's net profit for 2015-2017 will be 2.7/33/4 million yuan, diluted EPS will be 0.69/0.84/1.01 yuan respectively, and the current stock price corresponding to PE is 56/46/38 times, respectively. The company controlled the operating rights of GTV and WCA through the holding of Minghe Minghe and Yinchuan Holy Land. The brand effect drives the monetization of hidden and explicit commercial value in the future, and has great room for performance flexibility; it has consolidated the margin of performance safety through the acquisition of Celestial Interaction. As a rising international e-sports tournament brand, and GTV, as one of only two gaming channels, is extremely scarce and should be given a valuation premium. Combining company performance and valuation premiums, covered for the first time, gave a “recommended” rating! Stock price catalysts. The 2015 WCA season will begin in April and will take the form of a league throughout the year; the risk of an explosion in the performance of games owned by Tianxiang Interactive is alerted. The plan may face audit risks, the performance of the M&A target falls short of expectations, future delays fall short of expectations, and market style changes