Key points of the report describe the incident. The company and China Film signed a “Strategic Cooperation Agreement”. Based on long-term development strategy considerations, the two sides decided to join forces and work together to cooperate in the fields of film investment and production, and post-film product development. Incident review Chinese films are endowed with outstanding endowments and outstanding advantages in the field of film production, distribution, and screening. China Film entered A-shares in August this year. It is the film group with the strongest comprehensive strength and the most complete industrial chain in the domestic film industry: the film production sector, where Chinese films dominated or participated in the creation and production of 66 films in 2013-2015, achieving box office revenue of 9.89 billion yuan, accounting for 17.6% of the total box office share of domestic films in the past 3 years; the film distribution sector, with the largest digital film distribution management platform in the country, is one of the two domestic companies with distribution rights for imported films. In 2013-2015, the public dominated or participated in the distribution of 790 domestic films and 223 domestic films Imported films accounted for 58.4% and 58.1% of box office revenue respectively; in the film screening sector, the company had 3 holding theaters (China Film Star Beauty, China Film Digital, China Film Southern, and 4 participating theaters. At the end of 2015, the three companies owned theaters joined 1,323 theaters and 6814 screens, achieving a box office of 8.889 billion yuan, accounting for 20.17% of the country's total box office). The strategic cooperation will greatly promote the development of the company's film sector and lead to the comprehensive promotion of the Pan-Entertainment spin-off business. The company has advantages in upstream IP and artist resource layout. Its subsidiary Qianyi Zhicheng has popular artists such as Liu Ye, Wang Luodan, and Li Xiaoran, and has heavyweight IPs such as “Touch the Golden Charm” by Xinhua Pioneer, which was acquired in June this year. Using the advantages of Chinese films in the fields of film and television IP incubation and development, film investment and production, etc., it is possible to fully unleash the value of the company's high-quality film and television IP resources and artists, and expand the company's comprehensive competitive strength in film, video, audio, and travel businesses. Investment suggestions: The company's major cultural industry strategy continues to advance, and endogenesis and extension have collaborated to form a major cultural industry chain from artist training and brokerage, content production and distribution, film and television derivatives development, copyright incubation and cultivation to culture and education. The company expects EPS in 16-18 to be 0.46/0.67/0.92 yuan, and the corresponding PE is 40/27/20 times, respectively, giving it a “buy” rating. Risk warning: 1. The results of the strategic cooperation did not meet expectations