Key investment points: The reform of state-owned enterprises is already in full swing, and there is firm optimism about the reform of state-owned enterprise media stocks. The trend of state-owned enterprise reform has begun, pilot work has been fully rolled out, and the reform process will accelerate in the second half of the year. Traditional media companies with a state-owned enterprise background are more standardized in terms of system management and have abundant cash flow. In the current context of stricter policy supervision on games, live streaming, etc., and national policy support, they can better accept new resources and achieve cross-border integration of old and new media. At the same time, the innate advantages of traditional media in education and big data will also provide a good opportunity for the reform of state-owned enterprise media stocks. Industry pressure and strong policies have led to the company's strategic upgrading and transformation. Publishing Media was the first publishing company in China to achieve the overall listing of its editorial business and business, but as heavyweight publishing houses continued to go public, the company gradually faded out of the capital market. The traditional media industry as a whole is facing the impact of new media. With business saturation, slow growth, and even negative growth, the industry has entered a cold winter of development. On the other hand, the Third Plenary Session of the 18th Central Committee began the third round of state-owned enterprise reform. The publishing media received great attention from the Liaoning Provincial Committee and Provincial Government. The Propaganda Department of the Provincial Committee, the Ministry of Finance, the State Assets Administration Commission, and the Provincial Bureau of Press, Publication, Radio, Film, and Television also maintained active attention to the company, and the company became a key target for the reform and development of traditional media enterprises in Liaoning Province. Against the backdrop of industry pressure and strong policies, the publishing media formed a new management team in August 2015 and proposed “4+2” “secondary entrepreneurship” to accelerate the company's strategic upgrading and transformation. The advantages of large education resources are obvious, and the future education industry has high potential value. The company has been deeply involved in Liaoning Province for many years and has established close ties with the government, schools and educational research institutions in various cities and counties. Currently, the textbook business is mainly engaged in textbook agents for the People's Education Press, which occupies an absolute position in the market share of Liaoning Province. The Liaoning Fine Arts Publishing House, the Liaoning Audiovisual Publishing House, the Liaoning Electronic Press, and the Liaoning Children's Publishing House are jointly engaged in the textbook business and market development, focusing more on it. In addition to this, the teaching aid business cooperates with education authorities and educational research institutions in Liaoning Province to develop the field of teaching aids. Relying on existing educational resources, the company will expand and extend to primary and secondary school (K-12) education and training, vocational education, early childhood education, etc., to create a major education resource platform and form a “content+channel+platform” major education industry system. The cultural finance layout has initially completed the key investment in the pan-entertainment industry. We believe that capital management is the only way to transform traditional media companies. The company has deployed Zhongshan Securities in terms of cultural finance, invested in Tieling Xinxing Village Bank, and established Bohong Fund with Guotai Junan Innovation and Venture Capital Center. The initial scale was 501 million yuan, and the company invested 200 million yuan. Additionally, it teamed up with Neusoft Group to establish Rongsheng Financial Insurance Company. The company invested 140 million yuan, accounting for 14% of the total share capital. Currently, the publishing media has been fully involved in banks, funds, and insurance. The initial capital operation platform has been completed. The company will use capital platforms to focus on the pan-entertainment industry. The capital invested in the cultural media industry will not be less than 60% of the Bohong Fund's size, and the investment direction will be film, television, animation, and mobile games. At present, the company has entered the pan-entertainment industry, the “Big Ears” digital children's experience center has been completed, and the “Big Ears” Magical Empire database has been established, taking a solid first step in the transformation to new media. Profit forecasts and investment advice. The 2016-2018 EPS is expected to be 0.17 yuan, 0.19 yuan, and 0.21 yuan, respectively. Also, in the same industry, Southern Media, China Media Holdings, and Reader Media's agreed PE expectations for 2016 were 31, 42, and 51 times, respectively. Given the company's small market capitalization, recent transformation initiatives implemented one by one, and strong reforms and transformation, we gave the company a 62-fold valuation in 2016, with a corresponding target price of 10.54 yuan. Give an increase in holdings rating. Risk warning. There is a systemic risk in the general market, and the company's new media layout may be lower than expected.