Based on the main industry, actively transform the cultural industry. Gongda Electro Acoustic is a professional manufacturer and service provider of electro-acoustic components and components, and an overall provider of electro-acoustic technology solutions. At present, the company is looking for opportunities to upgrade and transform and enter the film and television entertainment industry through the acquisition of film and television entertainment companies, in order to cope with the decline in terminal demand in the industry, the slowdown in the growth rate of the smart device market, and the gradual concentration of middle and high-end consumer electronics manufacturers around the world. the problem of increasingly fierce market competition. At present, Gunda Electric intends to issue 56.61 million shares to the counterparty at 13.92 yuan per share and pay 1.1 billion yuan in cash to acquire all shares of Lehua Culture at a total price of 1.89 billion yuan. Formally enter the film and television entertainment industry, with the original intelligent electro-acoustic industry double main operation, enhance the sustainable profitability of listed companies.

Lehua Culture: to build the whole industry chain of film and television entertainment focusing on artists. Lehua Culture is a large-scale entertainment company integrating music, film and television production and distribution, artist brokerage, artist training, film investment and production in mainland China. In 2015, Yuehua Culture realized operating income of 211 million yuan and net profit of 50 million yuan. By the first half of 2016, the company's revenue had exceeded last year's total of 276 million yuan, and the net profit attributed to shareholders of the listed company was 56 million yuan, an increase of 1,323.48 percent over the same period last year. Lehua Culture currently has many artists such as Han Geng, Zhou Bichang, Huang Zheng, A Youqi, UNIQ, etc., and maintains long-term strategic cooperation with South Korea's Pledis, StarShip and other well-known entertainment companies, gradually forming a strong artist resource integration platform. The films invested by the company, such as "to our lost Youth", "the previous Strategy", "the Old Boy's Dragon Crossing the River", the TV series "one servant, two masters" and "Tiger Mom and Cat Dad" have received good responses at the box office and ratings respectively.

Ready to go, to create the future integration of intelligent electro-acoustic, film and television entertainment and other sectors of the film and television entertainment platform. Through this major asset restructuring, Gongda Diansheng will place high-quality assets with strong profitability and great potential for development, and formally enter the film and television entertainment industry, which will fundamentally improve the company's operating conditions and enhance the sustainable profitability of listed companies. At the same time, through the continuous accumulation of experience in the integration of film and television entertainment formats, Gongda Electronics will gradually enhance its resource endowment and core competence in the field of film and television entertainment, and continue to expand in the industrial chain and value chain through comprehensive operation of various formats, coordination and integration of high-quality content, and active grasp of consumer hot spots. In the future, listed companies will gradually build a film and television entertainment platform that integrates intelligent electrosound, film and television entertainment and other plates.

Profit forecast and valuation. Taking into account the estimated revenue of Lehua Culture, we expect the company's EPS to be 0.47,0.60 and 0.80 yuan from 2016 to 2018, with a "buy" rating of 43 times the 2016 dynamic PE and a six-month target price of 20.21 yuan.

Risk hints: the risk of transaction approval, the risk of business integration after investment mergers and acquisitions, the risk of intensified market competition, the regulatory risk of the film and television culture industry, the risk of being affected by the macroeconomic cycle, and the risk of over-dependence on individual artists.