Incident: The company plans to privately issue no more than 172 million shares to no more than 10 specific investors, and plans to raise no more than 1.2 billion dollars in capital for TV series and online drama production. Core view: 1. The company divested the traditional toy business in October 2016 to achieve a complete transformation to the direction of Internet culture, forming a business layout with high-quality IP operations as the carrier and quality content creation as the core. As an important engine for the company's development, the film and television business can further promote the growth of online games, animation and related derivative products through the synergy of video game interaction. Dream Star Garden is the leading premium drama production company in China. It has rich IP resource reserves, high per capita output value, and strong production capacity. The capital raised will be used for the production of top dramas, which will help the company further enhance its position and competitiveness in the industry. Audience demand for top quality dramas is the current situation and future trend. The overall production level of leading dramas has improved, and copyright prices and production costs have also increased accordingly. The company has used fund-raising funds to invest in the production of top dramas, further gaining ground in the top quality drama market. Dream Star Garden targets young audiences and has an advantage in adapting movies and TV dramas for romance novels and IP. At the same time, it also expands dramas with diverse themes such as detective stories, and reserves more than 30 copyrights, providing ammunition for subsequent film and TV drama productions. The reserve copyright includes the IP of famous works such as “Lonely Solitary, Spring Is Late,” “A Thousand Mountains, and Twilight Snow,” Tonghua's “Sauvignon Blanc,” “Mysteries of Jianghu,” and Wu Wei's “Peacock Gall.” 2. The sale of Thumb Play to obtain equity value of 173 million yuan, which will increase investment income. Sale of 30% of Thumb Play's shares at a transaction value of $227 million ($91 million in cash valuation+$136 million in equity consideration). The company previously invested in 30% of Thumb Play with equity consideration of 54 million yuan, and the transaction company received an investment value of 173 million yuan. Within 20 working days after the acquisition is approved and the assets are transferred, the company will receive 45.42 million initial cash consideration (according to the current review process, it is expected that investment income will be confirmed next year). 3. The company announced in April that controlling shareholders and executives intend to increase their holdings of the company within 6 months to enhance market confidence. When the company's stock price falls below 13 yuan/share, the controlling shareholder, Mr. Guo Xiangbin, will increase their holdings by no more than 2% of the total share capital. Director Mr. Qiu Liangsheng, Board Secretary/Deputy General Manager, Mr. Liu Xianzhi, Director/Deputy General Manager, Ms. Chen Chujun, and Director/Deputy General Manager, Mr. Chen Bo, respectively, will increase their holdings by no more than 6 million yuan. There will be no reduction in holdings for 6 months after completion of the increase in holdings. 4. Maintain a “buy” rating. Assuming that this fixed increase is completed by the end of 17, the company's net profit for 2017-2018 is predicted to be 351 million yuan (without including investment income for thumb games) and 420 million yuan, corresponding to the 17-18 EPS of 0.41 yuan and 0.41 yuan respectively (considering stock capital dilution in 2018). The current stock price corresponding to 17-18 PE is 25 times and 25 times. 5. Risk warning: The progress of film and television drama projects fell short of expectations; the rise in film and television drama costs reduced profits.