Incident: The company announced on January 14 that it will acquire 60% of the shares of Beijing Central Asia Internet Technology Development Co., Ltd. using other working capital of 59 million to 124.7 million yuan related to the main business from the capital raised. Equity transfers Fanghongxin News League and Shengshi Sunshine promised that in 2011 and 2012, China Asia Internet would achieve net profit of 23 million yuan and 27 million yuan after tax, respectively. Otherwise, the original shareholders shall use their shares to make up the difference free of charge. If the net profit of China Asia Internet in 2011 and 2012 both reaches the promised value, the company will begin to acquire the remaining 10% of China Asia Internet's shares in cash. The valuation is determined by reference to the assessed value of the Central Asia Internet. Comment: China Asia Internet had revenue of 45.27 million yuan and net profit of 19.36 million yuan in 2010, which is equivalent to 55% of the company's net profit in 2009, and the net profit for 2011 and 2012 has already promised 23 million yuan and 27 million yuan respectively, which will greatly boost the company's net profit for the next two years. The company's current acquisition will be paid in 5 installments, of which the 4th and 5th installments are calculated directly in proportion to the net profit of China Asia Internet in 2011 and 2012, respectively. If the net profit for one year reaches or exceeds 1.5 times the promised value, it is calculated as 1.5 times. If the net profit for the two years exactly reaches the value promised by the transferor, the corresponding total purchase price is 102.8 million yuan; if the net profit for the two years is zero or exceeds 1.5 times the promised value, then the corresponding purchase prices are 59 million yuan and 124.7 million yuan, respectively. Since its establishment in 2006, China Asia Internet has won development opportunities by relying on the exclusive authorization supported by the Ministry of Commerce and China Mobile's e-commerce operations. Since the product was officially launched in January 2008, it has become an influential mobile e-commerce operator in China. By the end of 2010, a total of 3.94 million mobile phone users had been developed. The current products mainly include commercial communication, mobile business, and enterprise applications. Among them, commercial communication and enterprise applications charge for enterprise users, and the mobile operator interface charges individual users. Along with the rapid growth of mobile Internet, there has been a blowout in the mobile e-commerce market. According to iResearch's forecast, the number of mobile e-commerce users in 2011 will reach 42.07 million, an increase of 58%; in 2010, the physical e-commerce market in China reached 2.26 billion yuan, and is expected to exceed 35 billion yuan in 2012. Through this acquisition, the company can extend its business to the mobile e-commerce market and launch a market-grabbing layout. Through acquisition and integration, the two companies will also maximize value through the sharing of platform channels. The company can use the wireless enterprise application of Central Asia Internet to connect with the company's superior products such as 35EQ and enterprise website construction; Central Asia Internet can also use the company's sales and after-sales support capabilities and brand influence in first-tier cities across the country to develop new markets. China Asia Internet currently has more than 30 employees, including 10 management and core technical business personnel. The company agreed with it in the agreement that the management team will be rewarded according to a certain percentage after exceeding the promised performance, and plans to formulate and implement an equity incentive plan. It was also agreed in the transfer agreement that the rate of loss of core personnel within two years after equity settlement is one of the payment prerequisites, thus reducing the risk of loss of personnel. Based on the fact that this acquisition will bring significant expansion to the company in terms of profit scale and business scope, we have raised the company's rating to a prudent increase in holdings.