Incident: 1. On December 14, 2010, the company obtained the exclusive right to operate Taiwan's “Yuquan International” large-scale 3DMMORPG “Legend of Xuanwu Haoxia” in mainland China, and will be officially launched in June next year. 2. On December 14, 2010, the company invested 9.5 million yuan with its own capital to establish “Xueyu Network Technology Co., Ltd.”, with the main purpose of developing online casual and fun games. 3. On December 16, 2010, the company announced that it had recently received a total of 15.5 million yuan in government subsidies. Comment: A two-pronged approach for investment and agency, increasing variety and enriching product lines. Foreign investment and agency are important means for companies to take advantage of capital advantages, expand rapidly, and enrich product lines. Since the company went public, it has invested and participated in many companies, including “Shenzhen Rhino Network Technology”, etc. It also set up overseas branches and plans to carry out overseas mergers and acquisitions. The agency for 3DMMORPG games aims to utilize external R&D capabilities to enrich the company's existing product line and business model. The company's own 3DMMORPG games are still under development, and the major games currently in operation are mostly 2D or 2.5D. The policy favors “red online games.” The company has always aimed to develop “red” and “ethnic” online games, and has always responded to national policies since its establishment. It has recently received a number of government subsidies totaling 15.5 million yuan, while 2009 and 2008 were only about 2.3 million yuan and 4.5 million yuan, respectively. The government subsidy alone is expected to contribute 0.1 yuan to the company's EPS this year. The “Treasure Project” is a good time. The company has always hoped for the “Treasure Trove Project” to recruit outstanding game talents, and now some personnel are in place. The growth rate of the industry has declined, and many online game companies have laid off employees, providing convenient conditions for the company to develop plans. This is also a good time for the company to enter a first-tier online game company. Next year, the “scale” advantage will be reflected, and the “careful recommendation” rating will be maintained. The lack of success between old and new games is the main reason for the decline in the company's performance growth rate this year. Next year, the company plans to launch about 10 games, creating a scale effect. We expect EPS for 10-12 to be 0.38, 0.45 and 0.66 yuan, corresponding to the price-earnings ratio of 60,51,34 times the current stock price. The valuation is basically reasonable, and the “prudent recommendation” rating is maintained.