Investment highlights: Incident: Weihai Culture, a wholly-owned subsidiary of the company, increased capital to Beijing Juguang Film Technology Co., Ltd. with 111 million yuan and transferred shares from some shareholders. After the transaction is completed, it will hold 41.11% of the shares in the target company. In 2015, Juguang Film achieved net profit of 10.12 million yuan, promising that net profit attributable to all shareholders after deducting non-recurring profit and loss from 2016 to 2018 was: 17 million yuan/23 million yuan/31 million yuan, respectively. The acquisition corresponds to 16 times the PE valuation in 2016. Different from the public's perception: (1) The first round of cultural and entertainment mergers and acquisitions has been officially launched, and the layout of the second main business has taken an important step. On July 30, the company released the “Zhejiang Weihai Construction Group Co., Ltd. Second Main Business Strategic Development Plan”. The mergers and acquisitions focused on painting a major step in the company's second main business layout. Founded in 2012, Juguang Film is a leading film and television special effects production company in China. Focused Film has a good reputation in the film and television special effects industry at home and abroad. It has won many visual effects awards at film festivals. So far, it has completed more than 30 cinema films at home and abroad, including Xu Ke's “Outsmarting Tiger Mountain”, “Di Renjie: King of Shinto Dragon”, “Wolf Totem” by Oscar gold-medal director Jean Jacques Arnaud, “Wolf Warrior” by Wu Jing, and director Bao Deshi, who won an Academy Award for “Crouching Tiger, Tibetan Dragon,” etc. (2) Strong execution, and the second main business layout is worth looking forward to. Weihai Co., Ltd. will focus on building a professional service chain in the process of industrialization of the culture and entertainment industry, providing professional services and tools at key points for the creativity, production, distribution and operation of content such as film, television, animation, and games. The goal is to become a first-class service provider in the industrialization process of China's culture and entertainment industry in the next 5 years by providing specialized services at key points in the industry and participating in the commercialization process of mainstream Chinese cultural and entertainment products (including movies, TV, animation, games, and derivatives). (3) PPP leader, performance has entered a period of accelerated growth. At present, the company has signed a total of 7.678 billion yuan in PPP contracts, mainly in the fields of municipal engineering and water environment management. The company has a good brand image in the Yangtze River Delta region and has strong ability to receive orders. Currently, the company has sufficient orders, and with the development of its second main business in culture and entertainment, it will enter a period of rapid growth. Catalysts for stock price performance: accelerated mergers and acquisitions of culture and entertainment; receipt of large orders; performance exceeding expectations, etc. Raise the profit forecast and maintain the “increase in holdings” rating: Considering the increase in the company's orders and the acceleration in the development of the second main business, the profit forecast for 2017 was raised. We expect the company's net profit for 16-18 to be 98 million/340 million/476 million (original value 130 million/247 million/346 million), corresponding growth rate of 55%/247%/40%, corresponding to increased and diluted PE of 107X/31X/22X (PE in the table below does not take into account additional dilution), maintaining an increase in holdings rating.