Tianzhou Culture released its 2016 annual report: During the reporting period, the company achieved revenue of 780 million yuan, an increase of 43.30% over the previous year; net profit of 244 million yuan, an increase of 38.22% over the previous year. Earnings per share were $0.44. The dividend plan was to transfer cash of $0.45 to 3 shares for every 10 shares. Acquisitions and performance growth: In 2016, the company achieved revenue of 780 million yuan, an increase of 43.30% over the previous year. Among them, the book publishing and distribution business achieved revenue of 434 million yuan, an increase of 48.13% over the previous year. The main reason was the addition of consolidated People's current revenue from June-December; the mobile online game business achieved revenue of 346 million yuan, an increase of 37.66% over the previous year, mainly increasing revenue from the merger of Youai Network in September-December. Focus on the three sectors of education, pan-entertainment, and culture, and promote investment and mergers and acquisitions: in 2016, the company invested 205 million yuan to control people's current history and integrate quality education resources; the “O2O Education Online Platform” won the stock market entry into the new third board; in terms of endogenous growth, the company signed a strategic cooperation agreement with the famous school Hengshui Middle School to get involved in education, training and teaching, textbook and aid publishing, etc., and the industry chain was further improved; with the market share of textbooks, teaching aids, etc., the company launched competitive education products one after another; the company's mobile Internet game business continued to grow. Subsidiaries developed their own boutique games “Forgotten Immortals” and “Crouching Tiger, Hidden Dragon” maintained steady development; successfully completed the merger, acquisition and restructuring of Youai Network. Youai Network has successfully launched and operated a number of self-developed mobile game products such as “Fengyun World OL”, “Contest and Family”, and “Shushan World”, with monthly turnover exceeding 10 million. The company actively implemented the “going global” strategy and jointly invested with the People's Publishing House to establish People's Tianzhou. It was one of the first two foreign special publishing companies in China, laying the foundation for international development. The company has internal growth and extension, a broad international and domestic layout, and common development online and offline to promote industrial upgrading. Profit forecast: We expect the company's revenue to reach 10.30, 12.67 and 1,545 billion yuan respectively in 2017-2019, with EPS of 0.53, 0.65 and 0.80 yuan respectively, corresponding to the 2017-2019 dynamic PE of 38X, 31X and 25X respectively. We are optimistic about the company's future development and give it a “prudent recommendation” investment rating. Risk warning: (1) increased competition in the industry; (2) risk of brain drain.