Matters: The company announced a major asset restructuring plan to acquire 100% of the shares of Xi'an Sanxing Media Network Technology Co., Ltd. at a price of no more than 1.104 billion yuan and raise supporting capital. The company's stock trading will resume on July 25. Our comments on this are as follows. Comment: Trading plan. The company plans to purchase 100% of the three shares by issuing shares and paying in cash. The target price will not exceed 1.104 billion yuan, of which 356 million yuan will be paid in cash. The remaining shares will be issued to the target shareholders at an issue price of 10.67 yuan/share. The unlocking period is long and the conditions are complicated, which will help to deeply bind the long-term interests of the target company's shareholders and the listed company. The company also issued shares to Western Travel Group, Cui Cheng, Pan Shengyang, and Qi Haiying to raise no more than 580 million dollars in supporting capital. The issue price is 11.04 per share, and the lockdown period is 36 months. The high percentage of major shareholders' subscriptions (accounting for 78% of ancillary issued shares) shows confidence in the company's future development. The target situation. The trio provides campus all-media services, marketing services for campus PR activities, and Internet services. It has established long-term partnerships with nearly 900 universities across the country, providing services to hundreds of customers including China Mobile, China Unicom, China Telecom, JD, and Suning. In 2015, the company was listed on the new third board and became the first stock in campus media. In 2015, the company achieved net profit of 24.48 million yuan (+94.4%), and the company promised to achieve net profit of not less than 80 million yuan/100 million/125 million yuan after deduction in 2016-2018, respectively. Financial impact. The acquisition corresponds to the 2016 promised performance of 14 times PE, which is lower than the average valuation level of comparable A-share media network companies (average PE about 42 times), and the pricing is reasonable. Considering this acquisition, assuming a consolidated list starting in 2017, it is estimated that the company's fully diluted EPS in 2017-2018 will be 0.34/0.42 yuan, which is 264%/278% thicker than before the acquisition (0.09/0.11 yuan), respectively, which is a significant increase. CITIC review. The company is an established state-owned listed travel company in Xi'an. Its main business is travel agencies and hotels. In recent years, operations have been under pressure and profitability has been weak (losses after deduction have been over 25 million in the past 3 years). Through this acquisition, the company has entered the advertising and digital marketing industry with high potential for development and officially embarked on a path of transformation. Short-term performance has increased significantly. It is expected that the synergy between online marketing and tourism business will be fully exploited in the medium to long term. In particular, through the development and marketing advantages of the trio in the “smart tourism” system, the company will promote the development of the company's “Internet +” strategy and achieve the strategic goal of expanding the national market. At the same time, the company introduced private capital shareholders to indirectly implement mixed reforms, and the management mechanism and philosophy are expected to improve. Risk factors: the risk that the main tourism industry will continue to decline in a fierce market competition environment; the risk that the acquisition plan will fail because it has failed to pass approval; the risk that business integration after the acquisition is slower than expected, etc. Earnings forecasts, valuations and investment ratings. The current restructuring plan still needs to be reviewed and approved by the company's shareholders' meeting, the Shaanxi Provincial State-owned Assets Administration Commission, and the Securities Regulatory Commission, etc., and requires a certain period of time. Regardless of the incremental contribution brought by the merger of the three, the 2016-2018 EPS is maintained at 0.07/0.09/0.11 yuan. Considering the acquisition, assuming that the three parties are consolidated from 2017, it is estimated that the fully diluted EPS in 2016-2018 will be 0.04/0.34/0.42 yuan, and the current price corresponding to 2016-2018 PE is 299/38/31 times, and the valuation is relatively high (the forecast price-earnings ratio of the ICT and media industry in 2017-18 is 32/26 times). Considering that the company's transformation path has begun, with a current market capitalization of only 3 billion yuan and a fixed increase of 4.6 billion yuan, there may be further capital operations in the future. The market value has room for upward flexibility and maintenance of the “increase in holdings” rating, so it is recommended that attention be paid to the subsequent strategy promotion and integration process.