Incident: The company announced that it plans to use its own capital to acquire 20% of Beijing Zhichuang's shares at a price of no more than 46.8 million yuan, and reserves the option to acquire the remaining 80% of Beijing Zhichuang's shares. Earlier, the company announced that it plans to use its own capital to acquire 60% of Guangzhou Orange Fruit's shares at a price of no more than 60 million yuan. Our view: 13 times PE acquires 20% of Beijing Zhichuang's shares: Beijing Zhichuang was founded in 2012 and focuses on mobile Internet marketing to provide brand customers with mobile marketing solutions. The company predicts that Beijing Zhichuang will achieve revenue of 0.65/0.85/111/140 million yuan in 2014-2017, and realized net profit of 1801/2341/303/39.55 million yuan, respectively. According to the company's performance forecast, the company's current acquisition of PE in 2014-2016 was 13/10/8 times, respectively. 8x PE acquired 60% of Guangzhou Orange Fruit's shares: Guangzhou Orange Fruit was founded in 2010 and mainly provides customers with digital marketing services throughout the entire network. The overall price of Guangzhou Orange Fruit is 103 million yuan. The company plans to use no more than 60 million yuan in cash to purchase 60% of Guangzhou Orange Fruit's shares. The value of this portion of the shares is 61.74 million yuan. Guangzhou Orange Fruit's shareholders promise that the net profit for 2014-2016 (based on the lower data after deducting non-recurring profit and loss) will not be less than 1,300/1755/ 23.69 million yuan. The company's purchase price corresponding to 2014-2016 PE was 8/6/4 times, respectively. The acquisition target has various characteristics and rich customer resources: Beijing Intelligent Innovation spent more than two years establishing a certain industry position in the mobile marketing segment for automobile and home chemical brands, obtained certain industry resource reserves and technical advantages, and in 2013-2014, won gold awards such as the iResearch Advertising Festival, the Financial Investment Awards, the Great Wall Festival, and MMA, which attracted the attention of the Chinese advertising industry. Beijing Zhichuang currently has more than 30 employees, including senior mobile marketing talents in planning, creativity, and technology. It mainly serves automobile brands such as Audi, Mercedes-Benz, and BMW, as well as the world's number one home chemical brand Lijieshi Group (representative works Durex, Dilux, and Viting). The “customized mobile advertising network” unique to Beijing Zichuang pioneered a new model of mobile marketing. The entire network covers mobile Internet users, and the number of impressions exceeds 100 million times per day. The mobile advertising conversion rate has been greatly increased through precise technology, while integrating traditional media resources through wireless interactive creativity and the advantages of leading mobile technology has become the core of marketing. Guangzhou Orange Fruit currently has 28 full-time employees in customer service, planning, creativity, public relations, technology, and senior online interactive marketing. The business mainly covers South China and East China, and has two branches: the Changsha branch and the Shanghai branch. Guangzhou Orange Fruit has rich customer resources. Core customers include Guangzhou Automobile Group Passenger Vehicle Co., Ltd., BYD Auto Sales Co., Ltd., GAC Fiat Automobile Co., Ltd., Dongfeng Liuzhou Automobile Co., Ltd., China Telecom Co., Ltd. Guangdong Branch, Guangzhou Jizhi Hengtong Advertising Co., Ltd., Guangzhou Yanbing Advertising Co., Ltd., and Guangzhou Jiana Advertising Co., Ltd. Profit forecast and valuation: We expect the company's 2014-2016 EPS to be 0.15/0.19/0.23 yuan respectively, and the current stock price corresponding to 2014-2016 PE is 82/67/55 times, respectively. Assuming that the company will acquire all remaining shares of Guangzhou Orange Fruit and Beijing Zhichuang by issuing shares in the future, and also consider future new extensions, we expect the company's 2014-2016 EPS to be 0.24/0.52/0.65 yuan, respectively, which is 53/24/19 times PE for 2014-2016. We believe that the company currently has a small market capitalization and a clear merger and acquisition strategy. We view the company's future transformation positively. For the first time, we have given the company a “recommendation” rating, with the first target market value of 4 billion dollars. Catalysts for stock price performance: implementation of new business development, implementation of new extended mergers and acquisitions Risk warning: M&A target performance falls short of expectations, integration falls short of expectations