Incidents: The company achieved operating income of 969 million yuan in 2016, a year-on-year decrease of about 19%; realized net profit of 60.14 million yuan, a year-on-year decrease of about 19%; after deducting non-recurring profit and loss, losses of about 25.66 million yuan, and overall operating pressure was high. The declining trend of traditional business is difficult to reverse. As a state-owned cultural listed company in Chengdu, the company's traditional business mainly involves major newspapers related business chains in Chengdu. As paper media, and newspaper business in particular, have been greatly impacted by Internet communication in recent years, on the one hand, subscription volume has declined rapidly; on the other hand, due to declining influence, advertising prices are also unsustainable, leading to an obvious downturn in the industry. Due to industry problems, the company's traditional business is also under overall pressure: the company's advertising revenue in 2016 was 255 million yuan, compared to 289 million in 2015; the printing business achieved revenue of 183 million, compared to 245 million in 2015; and the distribution business achieved revenue of 145 million yuan, compared to 145 million in 2015. The company is currently actively seeking reasonable methods, including asset divestment, business optimization, upstream and downstream layout and extension of the industrial chain, etc., to ease or resolve the operating pressure of traditional businesses. The gaming business fell short of expectations, but improvements are possible. The company achieved revenue of 189 million dollars in the game sector in 2016, a significant decline from the level of 320 million in 2015. As of the end of 2016, the games the company was operating included 4 mobile games, 6 page games, and 6 mobile games. There are two reasons why the company's game business fell short of expectations in 2016:1) past games were affected by the game life cycle, and overall turnover growth was not as fast as before; 2) newly developed games, including “Voldemort,” were not launched as scheduled on the NetEase platform. We believe that compared to the traditional business, the game business is expected to improve significantly in 2017 because there are more games in reserve and ready to be launched, and most of them are premium products. The education business is growing steadily. The company's education business is mainly realized by its “Shude Borui” school. The business achieved revenue of 106 million yuan in 2016, a steady increase over the level of 89.33 million yuan in 2015. At present, while deeply cultivating K12, Shude Borui School has begun to expand into preschool education. The possibility of achieving long-term stable development is extremely high. In the future, it will become an important business field for Borui Communications. Profit forecasts and investment advice. Because the decline in the newspaper industry was too high, we lowered the company's profit forecast. The 2017-2019 EPS is expected to be 0.07 yuan, 0.08 yuan, and 0.10 yuan, respectively. Currently, it is uncertain how to dispose of the company's traditional business, but the gaming and financial business may reverse in 2017. Overall, we gave the company an investment rating of “increased holdings”. Risk warning: Gaming business falls short of expectations, non-recurring profit or loss, or is unsustainable.