The main investment is to transform the Pan-Entertainment Comprehensive Group. Zhongnan Heavy Industries, the predecessor of Zhongnan culture, was founded in December 2008. The original main business was mainly engaged in the processing of pipe fittings, flanges, and pipe systems of various materials. In 2014, the company began to transform its main business and build a cultural media sector. It has successively laid out fields such as IP, artist brokerage, film and television, games, etc., and built its own pan-entertainment ecosystem. In the first three quarters of 2016, the company achieved revenue of 810 million yuan, a year-on-year increase of 30.38%, and net profit of 128 million yuan, a year-on-year increase of 60.66%. Movie box office has experienced fluctuations, and the era of game boutiquization has arrived. The movie box office market fluctuated in 2016, and the growth rate slowed. We believe that there is still room for long-term growth in movie box office. It is expected to exceed 100 billion yuan by 2020, and movie box office is expected to increase 20% year on year in 2017. The expansion and development of new media channels led to the creation of nine series with a total online broadcast volume of over 5 billion times in the first half of 2016. In 2016, the mobile game market was 81.92 billion yuan, an increase of 59.2% over the previous year. Game manufacturers with strong R&D capabilities and adhering to the boutique route will win in market integration. Core advantages: Close grip on IP and artists' core resources, and are expected to enjoy the highest premium content. The company has now formed a three-tier ecological layout: core power source, monetization channel matrix, strategic cooperation & investment. Judging from the core power source, the company has mastered top IP resources through the acquisition of Xinhua Pioneer. Xinhua Pioneer has contracted copyright agents such as Tianxia Bazing, Yan Geling, etc., and IP projects include “Touching the Golden Scenery” and “Trekking the Kunlun Ruins”; in addition, the company's Qianyi Zhicheng has accumulated rich artist resources. At the same time, the company and Laozai founded Zhongnan Music, which is expected to become a platform for the company's idol creation; the company also cooperated with the Nanjing University of the Arts to set up an art school, bringing a steady stream of artists to the company while entering the field of art education. IP and artists are currently the two scarce raw materials for content production, and the company maximizes the price increase trend of top content. Set up high-quality film, television and game companies, and strategically cooperate with Mango Media to expand its own ecosystem. In terms of the monetization channel matrix, the company completed the acquisition of Datang Huihuang and established Zhongnan Film Industry to enter film and television. Zhongnan Film Industry released a film list in May 2016. The main investment projects such as “Touch the Gold”, “White Oranges”, and “Five Swords in the Late Qin” are worth looking forward to; the acquisition of Value Interactive and Aurora Network, thus has a complete system layout for film and game interaction; at the level of investment and strategic cooperation, the company invests in the cultural industry through a joint fund with Mango Media, forming a close cooperative relationship from capital and business. In addition, the company invests in companies such as Singbar, Qishu Youyu, and Jimi Technology. to expand its own pan-entertainment layout. risk factors. Risk of unmet asset integration; industry competition and policy risk; risk of loss of core talent. Earnings forecasts, valuations and investment ratings. Considering the Aurora Network table, we predict that the company's 2016-2018 EPS preparation will be 0.49/0.62/0.74 yuan. The current price is 15.80 yuan, and the corresponding PE for 2016-2018 is 32/26/21 times. Comparable companies in the pan-entertainment sector had a PE range of 30-78 times in 2017, with an average value of 43 times. Considering the company's growth, high-quality IP and artist resource reserves, comprehensive layout in the film, television and game fields, and close cooperative relationships with high-quality resources such as Mango Media and Singbar, we gave the company 40 times PE in 2017, corresponding to an overall valuation of 20 billion yuan; the target market value for traditional business was 1 billion yuan, with a comprehensive target price of 24.70 yuan. For the first time, the company was given a “buy” rating.