The company's performance growth is stable, and the status of publishing and distribution has been boosted in an all-round way. In 2016, the company achieved a total operating income of 1.639 billion yuan, an increase of 6.6% over the same period last year, of which the main business income was 1.592 billion yuan, an increase of 5.12% over the same period last year; net profit returned to its mother was 123 million yuan, an increase of 53.32% over the same period last year; and diluted earnings per share was 0.22 yuan, an increase of 46.67% over the same period last year.

Of the company's annual revenue, 743 million yuan came from teaching materials, accounting for 45.33%, 586 million yuan from paper, printing consumables and bill printing, 35.72% from general book business, 33.66% from other products and non-product income, 4.91%, internal deduction of 322 million yuan, accounting for-19.62%. The main reason for the profit growth is that the new management of the company gives full play to the intensive advantages of the group, the coordination of the recruitment, printing and distribution of teaching materials, and the increase in efficiency.

Explore the transformation of the sales model, strengthen the construction of online sales channels, and tap new growth points. In 2016, the company made full use of self-media and new media to realize online promotion and offline store experience collaborative marketing, and speed up the overall transformation and upgrading of the distribution chain system. Build into a "Internet + community bookstore + campus bookstore + enterprise bookstore" online and offline full-coverage sales channel, with online store extension to increase market share. The online sales of its publishing units achieved a revenue growth rate of 112.76% on the brand e-commerce platform and 154.76% on the self-built online platform; the company's issuer's business revenue on the self-built online platform increased by 355.71% compared with the same period last year. The revenue of online book sales reached 62.2279 million yuan, an increase of 98.23% over the same period last year. With the expansion of online and offline sales channels, the revenue growth rate of general book business has changed from negative to positive, achieving a rapid growth rate of 10.48%, with the average online sales accounting for 30%.

To build an integrated industrial chain of "editing, printing, distribution and supply", give full play to the synergy effect and realize intensive management. In March 2016, the company contributed 200 million yuan with its own capital to participate in the establishment of Liaoning Bohong Cultural Industry Venture Capital Fund to invest in the underlying assets of the cultural industry, making reserves for the subsequent implementation of M & An integration and promoting the company's extension expansion. In November 2016, the Liaoning Publishing and Printing material Distribution Industrial Park owned by the controlling shareholder Publishing Group was acquired to realize the intensive warehousing, distribution and service standards of the company's books with the help of the advantages of the Green Printing Industrial Park. improve distribution and distribution capacity, invigorate stock assets. In December 2016, 92.58 million yuan was used to acquire all the shares and industrial parks of Xinhua Printing Company, which is owned by the controlling shareholder Publishing Group, and continue to promote the intensive operation of printing, copyright, paper and binding design and reduce costs. The whole industry chain of the company can reduce the cost and increase the efficiency obviously, releasing the internal value.

The overall advantages of university education are fully revealed, and the pan-entertainment derivative forms are fully activated. The company attaches great importance to the pillar role of educational publishing, jointly promotes market development and teaching materials, enriches the K12 education system, allocates the management right of leased teaching materials to subordinate publishing units, and stimulates the business vitality of publishing houses. The market share of Liao edition books increased significantly, more than 50,000 books doubled compared with 2015, and the export and introduction of copyright increased by 18% and 20% respectively. In February 2016, the company invested 8 million yuan in Liaoning Daewa Cultural Development Co., Ltd. to invest in the Big ear Wizarding Empire project to build and operate the first all-media large-scale children's theme park in China that integrates education, high-tech experience and leisure and entertainment. The company deeply excavates book content resources, relies on the original IP, incubates and cultivates cultural derivative formats, and introduces digital experience projects to quickly form a strong industrial plate.

Profit forecast. In 2017, the company will further promote the six major industrial layout strategies of "four plus two", strengthen the "four" steps of publishing, distribution, education and pan-entertainment, and take into account the "two" of trade and financial industries. We expect the company's EPS in 2017-2019 to be 0.25,0.38,0.55 respectively, and refer to the same industry, Wanxin Media, Huasu Media and Reader Media in 2017, the PE is 32.20,31.44,68.92 times respectively. In view of the small market capitalization of the company and the smooth progress of the transformation measures, we give the company a valuation of 55 times in 2017, corresponding to the target price of 13.75 yuan. Give a buy rating.

Risk hint. The risk of publishing topic selection; the risk of return and inventory increase; the risk of talent team management and talent shortage.