The company is a leading Internet television operator, one of the seven Internet TV integrated broadcast control platform licensees, and licenses are scarce. Huashu Media started early in the field of Internet television. The company provides interactive television content, value-added services and solutions for radio and television networks in more than 20 provinces and 100 cities across the country, covering 90% of the country's radio and television enterprises; Internet TV has a market share of more than 50% in the country. At the same time, the company is also one of the seven Internet TV integrated broadcast control platform licensees, and has resource advantages and integration capabilities in the field of Internet television. The introduction of Yunxi Investment as a second shareholder is expected to form a strong alliance with Ali. In May of last year, the company invested 6.536 billion yuan in the non-public offering of Yunxi. Yunxi Investment became the company's second largest shareholder, holding 20% of the shares. The actual controllers of Yunxi Investment are Mr. Shi Yuzhu and Mr. Ma Yun. The funds raised in this private offering will focus on developing the country's new media business and integrating upstream and downstream resources in the industrial chain. On the one hand, the company will increase the procurement of high-quality video content copyright and consolidate and strengthen the company's advantages in digital program content resource reserves; on the other hand, the company will actively lay out the Internet innovation industry and develop cross-border smart terminal products such as OTT on a large scale to seize market entry opportunities for strategic emerging industries such as Internet TV and increase the share of high-growth businesses in the company's overall business structure. We believe that the company's platform advantages, content advantages, and offline channel advantages are expected to collaborate with Ali's big data advantages and online channel advantages. The company's current stock price is 17% off the non-public offering price of $22.8 in 2015. The controlling shareholders are expected to inject assets in '17. When Huashu Media went backdoor in 2012, the other seven shareholders of Huashu Media and Zhejiang Network promised that under the premise of complying with national policies, the assets and business that Zhejiang Huashu Radio and Television Network Co., Ltd. had completed integration and holding would be placed into the listed company in an appropriate manner within five years after the major asset restructuring was approved and implemented. The specific transaction method was determined by the listed company and the specific circumstances of the assets invested at that time. The commitment expires at the end of '17. We believe that if the Zhejiang network is injected into listed companies, the number of users of the company will increase dramatically. Currently, the number of users in the Hangzhou region is around 3 million, and the number of Internet users in Zhejiang is over 12 million. If the user base can be expanded, it will open up new space for the company's later growth. Status of radio and television cooperation across provinces. At the capital level, Huashu Media holds 3.2% of the shares of Guizhou Radio and Television and 10% of the shares of Xinjiang Radio and Television. At the business level, the company has close cooperation with Guizhou Radio and Television, Xinjiang Radio and Television, and radio and television in various provinces in various areas such as platforms, business, resources, and technology. Guizhou Radio and Television's IPO was approved by the Securities Regulatory Commission in November this year, which is expected to bring the company both investment income and business level improvement. The copyright content is rich in reserves. Every year, the company allocates 150 to 200 million dollars for the purchase of copyrighted content. Currently, the company has absorbed content from more than 100 well-known program content suppliers at home and abroad, and has a million-hour digital program content media resource library, including movies, TV series, comprehensive information programs, entertainment and variety shows, original animation programs, music programs, etc. After 15 years of private distribution, the company will invest 1.5 billion dollars in media content center construction projects. We believe that after Yunxi Investment enters as a strategic investor, it is expected to have a synergistic effect with content platforms such as Alibaba Pictures and Youku Tudou, which are owned by Ali. The reform of the radio and television industry is worth looking forward to. In August of this year, five departments including the Propaganda Department of the CPC jointly issued “Opinions on Deepening the Reform of the Classification of State-owned Cultural Enterprises”, making specific arrangements for deepening the classification reform of state-owned cultural enterprises. Previously, the reform of Shanghai Wenguang Group became a benchmark for the industry. In June of this year, Happy Buying, a listed company owned by Hunan Radio and Television, issued a suspension notice on important matters. The assets that the company plans to purchase in this transaction include all or controlling shares in 7 companies controlled by Hunan Radio and Television, which is the same actual controller as the company. In November, Happy Buy announced the termination of major asset restructuring matters. Although the current reorganization of radio and television in Hunan was not successful, it has demonstrated its determination to reform. Since then, it has not been ruled out that reforms will be carried out through other channels. We expect that media and state-owned enterprise reforms in various regions will continue to advance in the later stages. Give a “Recommended” rating. We believe that the company's current stock price is discounted 17% compared to the non-public offering price of 22.8 yuan. It has a margin of safety, and we are optimistic that the company is the “Internet+TV” leader and has asset injection expectations in '17. If “Zhejiang Network” can be injected, the user base will increase dramatically, and Yunxi Investment will be introduced as a second shareholder. It is expected that a strong alliance with Ali will be formed later, giving it a “recommended” rating. Risk warning: (1) the risk of major changes in the Internet TV industry policy; (2) the risk of asset injection falling short of expectations.