Key investment points The traditional main business is weak, and the performance growth rate is lower than expected. In 2016, the company achieved operating income of 1,432 billion yuan, a year-on-year decrease of 10.78%; realized net profit of 106 million yuan, a year-on-year decrease of 61.35%; and achieved net profit of 10.69 million yuan, a year-on-year decrease of 94.20%. The decline in the company's performance was mainly pressured by traditional advertising business and value-added business, and revenue declined; in terms of cost, due to large investment due to business transformation, net profit declined sharply. The advertising business declined due to competition, and the information business remained stable. The company's Internet advertising and promotion business achieved revenue of 642 million yuan in 2016, a year-on-year decrease of 11.78% against the backdrop of slowing growth in the overall Internet advertising market and increasing competition in vertical segmentation. In the field of public opinion business, the subsidiary People Online continues to strengthen big data technology services and launch a series of products and services such as new media think tank reports and online private cloud platforms, laying the foundation for its transformation into a big data and consulting company. The information service business achieved revenue of 304 million yuan, an increase of 13.86% over the previous year. Mobile value-added has strengthened innovation, and the lottery business is awaiting policy release. During the reporting period, the company's value-added business achieved revenue of 460 million yuan, a year-on-year decrease of 11.88%. The main reason is that the market space of the wireless value-added business has been greatly reduced under the strict control of telecom operators. In terms of mobile video business, the subsidiary People's Video adjusted its business strategy, strengthened the development and operation of innovative Internet products, and the client focused on the cooperation and operation of film, television, and live music broadcasts. During the reporting period, the Internet lottery platform People and Australian customers had no revenue contributions due to the suspension of business. The specific lottery development date still requires subsequent policy approval. Build a mainstream new media platform with a high brand level. In the context of economic transformation and upgrading, media culture has gradually become the focus of current central government reforms, and the government will further use the Internet mentality to create mainstream core media. We believe that People's Online is currently one of the media platforms with the most core brand value in China. The company is expected to actively use its advantages while using policy dividends to implement relevant innovations and reforms, and continue to lay out vertical expansion fields along the industrial chain strategy to create a new media platform with core influence through a series of actions such as endogenous growth and mergers and acquisitions. Risk warning. The impact of economic fluctuations on advertising growth; the risk of revenue fluctuations in the Internet and mobile Internet projects; the risk of new business development. Earnings forecasts, valuations and investment ratings. Considering the pressure on the company's traditional business, we lowered the company's 2017-18 EPS forecast to 0.21/0.23 yuan (the original 2017/18 EPS forecast was 0.27/0.27 yuan), giving an additional forecast of 0.25 yuan for 2019. The current price is 15.68 yuan, corresponding to 2017-19 PE74/70/63 times. Given the company's strategic position in integrating traditional media with emerging media, business layout and media brand height, and the responsibility of the central state-owned media, we maintain the company's “increased holdings” rating.