Investment highlights: The acquisition of Eddie Education for 2.9 billion dollars. Hong Kong Qinshang, a wholly-owned subsidiary of the company, signed a “Memorandum of Key Terms” and a “Memorandum of Understanding Amendment Agreement” with Aidi Education Acquisition (Cayman) Limited (Cayman Islands) and the Beijing Australian Exhibition. Hong Kong Qinshang plans to acquire 100% of Aidi's shares in NIT Education Group (NIT Education Group) in the form of cash. Eddie Education is a limited liability company established and surviving exempted under Cayman Islands law. Eddie Education has passed a number of arrangements to control a number of educational assets and school operations located in China. The initial valuation of the acquisition was RMB 2.9 billion equivalent in US dollars. Eddie has a long history of education, and is excellent in both size and quality. The school kindergarten curriculum includes English, Chinese studies, virtue, Eastern and Western etiquette, etc., and art courses such as Orff music and art. The elementary school curriculum mainly includes basic courses+English+information technology+art. Junior high schools offer the three compulsory courses of IGCSE: mathematics, English, and science. Students can obtain a certificate of completion of the junior high school level issued by the Cambridge University International Examination Board. The high school level has categories such as Australian International High School (WACE), American International High School (ASE), British International High School (A-LEVEL), and international college preparatory courses, and English training courses. At the same time, Eddy is also the official test site for the five major examinations including IELTS, WACE\ TEE, A-LEVEL, TOFEL, and ACT. We estimate that the average tuition fee for Eddie International School students is 200,000 per year* 2,600 students, with an income of about 500 million yuan and a profit of about 150 to 200 million yuan (if converted to a for-profit school, tuition fees and tax costs may change). Take the lead in using funds to target high-quality assets, wait for the time to come, and then merge into listed companies. Currently, the underlying asset has VIE backbone. There are obstacles for A-share listed companies to directly merge and acquire VIE-structured assets, and it is impossible to list them together. At the same time, the business entity is a school asset, and it will still take some time to complete the nature change and clarify property rights after the “Public Promotion Law” is passed. This time, the company or Hong Kong Qinshang plans to subscribe to the special fund's share of 600 to 1 billion yuan, which will not cause the company to gain control of the target company. The company took the lead in using funds to target quality education assets in this market, and wait until the nature of the assets and transaction structure are clarified before being incorporated into listed companies. Maintain profit forecasts and maintain an increase in holdings rating. After the completion of this merger and acquisition, the company has basically completed the main structure within the K12+3 stage, and will continue to add bricks and tiles to education in the future. We expect Longwen Education to have a profit of about 130 million in 2017, Little Red Hat's promised profit of 57.5 million in 2017 (and additional parks will increase profit levels), Eddie Education is calculated based on a profit of 150 million, and British Education's profit of 13 million. Under the corporate system, the overall profit scale of education will reach 350 million + million. In addition to the LED business, the company's overall profit will reach 400 million + million. The company currently has a market value of 14 billion yuan, and we think the target market value is 20 billion yuan. Since the Eddie Education deal is still ongoing, there is no merger for the time being, so maintain the profit forecast for 16-18 EPS of 0.16 yuan, 0.20 yuan, and 0.30 yuan, and the corresponding PE of 59, 47, and 32 times. If we consider the comprehensive merger of Eddie Education without additional distribution, the corresponding PE fell 35 times in 2017. It is recommended that active attention be paid to maintain an increase in holdings rating.