The “supply-side” reform of book publishing has been carried out comprehensively, and the main distribution business is developing rapidly. In 2016, the company expects net profit attributable to listed companies to increase by 65%-85% year-on-year, about 537 million yuan to 602 million yuan. Among them, the company's main issuer business developed rapidly, and profits increased year on year. As of the first half of 2016, the company's overall book retail market share was 3.2%, ranking 4th among national publishing groups, up 2 places from the same period in 2015; art clubs ranked first among similar local publishing houses in the country, art clubs and children's groups maintained the top three; and the company's publishing units were selected for 47 national publishing awards, projects and recommendations. At the same time, the company has achieved remarkable results in “cost reduction and efficiency” work, and costs and period expenses have been reduced. As of the first half of 2016, the company has reduced costs and increased efficiency by about 38 million yuan, and the four utility expenses have been reduced by 7.9 million yuan, a decrease of 20% over the previous year. The company will comprehensively carry out “supply-side” book publishing reforms and optimize the variety structure, which will strongly enhance the company's market position and promote performance growth. Deeply connect with overseas markets and seize the new cultural “Belt and Road” opportunities. The company actively grasped the “Belt and Road” strategic opportunities, laid out the international market, and achieved phased results in its cultural “going global” work. 1) Attend important international conferences. In June 2016, Pan Qisheng, chairman of the company, was invited to attend the “Silk Road International Forum and China-Poland Local, Economic and Trade Cooperation Forum” and deliver a keynote speech on “Belt and Road” to help sustainable global development; 2) Expanding foreign research and exchanges. In February 2016, the company went to Europe to conduct field research. The inspection team visited 6 top international publishing groups, including France's Natan Publishing Group, and 8 world-renowned cultural and educational institutions, including the Royal Academy of Music, and reached a series of cooperation agreements. 3) Strengthen the export of copyright to the outside world. As of the first half of 2016, the company has exported 83 varieties of copyright to 15 countries, including the United Kingdom, Germany, France, the Netherlands and other European countries. 4) Overseas investment. The company declared that it had obtained the “Enterprise Overseas Investment Certificate” and started the preparation and operation of subsidiaries in Britain, Hong Kong and other places. 5) Overseas investment. The company participated in investment promotion activities such as “2016 Malaysia-Hubei Media Week” and the “Central China International Production Capacity Cooperation Forum and Enterprise Matchmaking Conference” to reach a series of overseas cooperation intentions. Through deep connections with overseas markets, the company will seize the cultural “Belt and Road” opportunity, construct an open pattern, and enhance competitiveness. An equity cooperation agreement was signed with Jincheng Press to accelerate resource integration. On January 13, 2017, the company signed an equity cooperation agreement with Jincheng Press in Beijing. The two sides will restructure Xiyuan Press Co., Ltd. according to a 1:1 ratio, which is the first state-owned cultural enterprise equity cooperation in the country. Following the change of leadership team in October 2014, the company continued to integrate resources under the strategic positioning of a diversified cultural investment platform, focusing on strategic cooperation with central publishing units in Beijing; participated in China National Copyright Exchange Center Co., Ltd., which plans to invest 5 billion yuan, to be completed in installments; and cooperated with Hong Kong's new Henderson Group to accelerate the expansion of the industrial chain and expand marketing channels. The company has always attached importance to the integration of high-quality resources. It is expected that through mergers and restructuring across regions and ownership systems, it will continue to expand the main publishing business, raise the level of scale, intensification and specialization of the cultural industry, and promote the upgrading of the company's business. Profit forecast. Future highlights: (1) Actively develop the main business, accelerate resource integration, implement cross-region and cross-ownership resource integration, and promote industrial chain extension, focusing on strategic cooperation with central publishing units in Beijing. The main business is expected to continue to grow and strengthen in the future; (2) laying out overseas markets, the cultural “going global” strategy has achieved phased results, and the cultural “Belt and Road” has become a highlight; (3) Achieving remarkable results in cost reduction and efficiency. The gross margin of various businesses is expected to rise; (4) There is a lot of focus on cultivating the preschool education industry, and the performance growth of iCube is remarkable. We gave the company 2016-2018 EPS of 0.43 yuan, 0.57 yuan, and 0.74 yuan. Also, taking into account that Zhejiang Daily Media, which is also developing from traditional publishing to digitalization, unanimously anticipated 34.41 times PE in 2016. We gave the company 25 times PE in 2016, with a target price of 10.75 yuan, maintaining the buying rating. Risk warning. The performance growth rate of traditional industries has declined. Centralized release of systemic risk in the general market.