Key points 1. The main LED business is growing steadily, and the effects of industrial mergers and acquisitions are remarkable. The increase in the company's performance is mainly due to LED manufacturers expanding technology. Among them, Tuoxiang Technology is actively developing overseas markets and consolidating its main business performance. Kang Shuozhan launched a new LED elliptical spherical screen to enrich the company's product range. We believe that the future growth of the company's main LED business will be stable, which will protect the company's further development of the sports industry. 2. Strengthen sports business equity development, achieve collaborative development between the two main businesses, and continue to provide LED equipment and event services for the Chinese Super League and China League 1 games during the reporting period, actively bid for the official supplier of LED displays for the Chinese Super League in 2017-2020, and at the same time, the company acquired 49% of Huashi New Culture's shares in cash. We believe that the company actively connects upstream and downstream sports marketing, strengthens the company's ability to monetize sports resources, and realizes the bundled development of “LED+ soccer marketing”. 3. The soccer industry chain layout is perfect, and the soccer industry under the company that actively explores market segments in the future is rich in resources: the company sponsors the Portuguese League, the Chinese Super League, and the Chinese League 1, and the company's actual controllers invest in Shenzhen Renren Soccer Club and the Australian Super League's Newcastle Jets Club. In the future, the company will give full play to the advantages of the strategic soccer layout of China, Portugal and Australia in multiple regional and multi-level leagues, implement plans for players to stay abroad, and actively explore market segments such as player brokerage, soccer youth training, and sports tourism, with huge potential. 4. Investment suggestions: Huashi New Culture promised net profit of 6,000/8,000/10 million yuan in 2016-2018, Tuoxiang Technology promised net profit of 2000/2500/31.25 million yuan in 2015-2017. Considering Huashi New Culture's 49% equity investment income, forecast 2016-2018 revenue of 5.64/6.68/782 billion yuan, net profit of 0.86/1.06/127 million yuan, corresponding to EPS 0.25/0.30/0.36 yuan, corresponding to PE 72/ 58/49 times, giving a “recommended” rating. 5 Risk Reminder: Sports Transformation Falls Short of Expectations, Managing Risks