Layout to build a new media ecosystem and promote the upgrading of the "media + Internet" strategy. In 2016, the company carried out the layout of the new media ecosystem around "platform + content + channel + terminal", carried out the integrated development of traditional media business and new media business, and promoted the upgrading of the "media + Internet" strategy. Through effective measures, the company pays close attention to elite target management and key work implementation, and has outstanding performance in cable network business, media content business, investment management business, tourism hotel business, mobile new media and other business sectors. In the first three quarters of 2016, the company achieved an operating income of 5.215 billion yuan (an increase of 34.27% over the same period last year) and a net profit of 214 million yuan (37.60% less than the same period last year).

The integration and development of traditional media business and new media business, the layout of mobile new media ecosystem. The company and Yunhong Advertising Company have made great efforts to expand the new media advertising business such as mango TV, iQIYI, Inc. and Tudou network, and the revenue has increased greatly. Yunhong Advertising has achieved business revenue of 1.863 billion yuan in the first half of 2016, an increase of 60.83% over the same period the previous year. The content section has implemented the integration of resources on the basis of the original, among which the Lion Gate project was released in the first half of the year, such as "amazing Rogue 2", "Egyptian Gods", "prisoners" and other films, which grossed 496 million yuan at the global box office. Internet companies also actively promote characteristic business on their own advantages. Shanghai Jiuyou quickly penetrates the mobile game market through IP resources and new games, paying attention to new products, new technologies and new elements; Yikos takes e-commerce as its main customers, Tencent and Baidu, Inc. as its main media to expand the market scale through differentiated marketing services. The company's efforts in mobile new media and traditional media business complement each other and promote together.

Create a regional cable TV home Internet ecosystem. Taking "comprehensive transformation, upgrading and integration, building a regional CATV home Internet ecosystem" as the strategic direction, the company has carried out six projects such as network interconnection, two-way network optimization and penetration, and cable and wireless converged network construction. Around the four work of "two-way network reform, home box business, smart city and IDC construction", the company has promoted various management measures and achieved certain benefits. The revenue of cable network business reached 1.181 billion yuan in the first half of 2016, an increase of 3.29% over the same period the previous year. In terms of network cooperation outside the province, the company adopts the idea of "industrial investment + financial investment" to contact a number of cable TV operators to form a strategic alliance.

Profit forecast. The company promotes strategic upgrading, traditional media business and new media business integration and development, to build a large-scale comprehensive cultural media company. Future highlights: 1) make every effort to build a mobile advertising ecosystem, and coordinate the development of traditional media business and new media business; 2) steadily promote the "media + Internet" strategy and form a strategic alliance with a number of limited TV operators to create a cable TV home Internet ecosystem. We estimate that the EPS of the company from 2017 to 2018 is 0.42 yuan and 0.49 yuan respectively. With reference to the same industry Guangxi Radio and Television, China Media Holdings and CITIC Guoan, the PE in 2017 is expected to be 45, 40, 37 times, we give the company 40 times, corresponding to the 2017 target price of 16.80 yuan. Give a buy rating.

Risk hint. The transformation of the company is not as expected; economic downside risks.