Key investment points: Huashu Media is the leader in radio and television plus new media. Huashu Media is one of the first radio and television companies to develop new media business nationwide, and the growth rate of interactive television and Internet television is high. The company's performance has been growing steadily since its listing, with both gross margin and net profit margin rising steadily. Consumption upgrade+technology upgrade drive the development of smart TVs, and the company enjoys industry dividends through multi-dimensional business. Currently, interactive TV, OTT terminals, and IPTV are all booming as specific forms of smart TVs. Interactive TV: The increase in the coverage and penetration rate of two-way networks provides the foundation for the development of interactive television. As of the third quarter of 2016, the two-way penetration rate of cable reached 23.95%. With the continuous increase in users penetrating two-way networks, the penetration rate of interactive television also increased at the same time. IPTV and OTT have also maintained rapid growth. The number of IPTV subscribers in the first three quarters of 2016 increased 65% compared to the end of 2015. According to statistics from Aowei Cloud Network, the number of OTT terminals owned reached 165 million by the end of 2015, an increase of 37% over the previous year. As the number of terminals rises, the size of the OTT ecosystem will also increase dramatically. Asset injection expectations are getting closer, and the number of users is expected to increase dramatically. Huashu Group, the controlling shareholder of the company, promised in 2012 to invest the assets and business that Zhejiang Huashu has integrated and held into the listed company in an appropriate manner within five years. The end of 2017 is the promised deadline. Currently, out of 80 radio and television cable networks in Zhejiang Province, 74 have completed the “one province, one network” integration task. Furthermore, Huashu Group also has Zhongguang Cable. Currently, Huashu Media operates nearly 2.5 million cable TV subscribers, mainly in the Hangzhou region. After the integration is completed, Zhejiang Huashu will reach 13 million subscribers, China Guangzhou Cable 4 million subscribers, and if injected, there will be nearly 20 million subscribers. The company has platform advantages and content advantages. The company is one of the seven Internet TV broadcast control licenses, and has an IPTV license and a license for integrated broadcast control business and content service business for mobile television. Based on the Internet TV broadcast control license, the company has built a platform from content to operation. At the end of 2015, the company's Internet TV user coverage reached 80 million, active on-demand users reached 32 million, and the market share was about 50%. The company's mobile TV subscribers reached 30 million, and the cumulative paid subscribers reached 10 million. In terms of content, the company invests 150 to 200 million dollars for content every year. Currently, the company has absorbed content from more than 100 well-known program content suppliers at home and abroad. After a fixed increase, Ma Yun and Shi Yuzhu were introduced as strategic shareholders, and they had plenty of cash on hand, which was conducive to the rapid expansion of the new media business. Profit forecast. We expect Huashu Media's earnings per share in 2016-2018 to be 0.44 yuan, 0.53 yuan, and 0.62 yuan, respectively, and the price-earnings ratios corresponding to the current stock price are 39.4x, 32.9x, and 28.3x, respectively. We believe that the current stock price of Huashu Media has a margin of safety, inverting 25% compared to the fixed price increase of 6.5 billion yuan invested by Yunxi in 2015 at 22.8 yuan. Considering the company's high probability of asset injection in 2017, active development of the smart TV business, and excellent management, the 6.8 billion dollars in cash on hand can support the rapid expansion of new business, the “recommended” rating was given. Risk warning: 1) the risk of major changes in the Internet TV industry policy; 2) the risk of asset injection falling short of expectations.