Incident: On February 6, Tibet Tourism (600749.CH/RMB 23.62, not rated) issued an announcement to purchase 100% of La Cala's shares held by 46 counterparties including Sun Taoran by issuing shares and paying cash, and to raise supporting capital. The total price of 100% of La Cala's shares is 11 billion yuan, of which the listed company will pay 2.5 billion yuan of the transaction consideration in cash, 8.5 billion yuan of the transaction consideration by issuing shares, and the stock issue price is 18.65 yuan/share. Listed companies intend to raise no more than 5.5 billion yuan in supporting capital, with a stock offering price of 18.65 yuan/share. This transaction constitutes a major asset restructuring and does not constitute a backdoor listing. The company's stock trading will not resume for the time being. Comment: 1. The main business of Tibet tourism is the development and operation of scenic spots in the Tibet region, tourism and cultural management, tourism services, etc. Currently, the product structure is relatively uniform. Affected by changes in the tourism environment in Tibet, the company is facing pressure from slowing growth. The company has the right to operate a series of important tourist sites in Tibet, such as the Brahmaputra Grand Canyon Scenic Area, Alishenshan Sacred Lake Scenic Area, Benri Mountain (Niyang River Scenic Belt) Scenic Area, Basuntso Scenic Area, and Lulang Huahai Ranch (Lulang Wuzhai) Scenic Area. In 2015, the company achieved revenue of 152,0485 million yuan, a year-on-year decrease of 4.98%. The company's Ali Shenshan Sacred Lake Scenic Area was affected by the earthquake in Nepal, and the continuation of the “two limits and one police” policy (limiting the number of passengers carried by vehicles, limiting speed, and equipping each vehicle with police) led to a decline in revenue. The company's net profit attributable to shareholders of the parent company was 5.3553 million yuan, an increase of 38.815 million yuan over the same period last year - 33.4562 million yuan. The main reason for the increase in the company's performance was the sale of Tibet Guofeng Advertising Co., Ltd. and the repurchase of agricultural bank non-performing loans to complete debt restructuring to obtain non-recurring income to make up for operating losses. 2. After this transaction, the actual controller of the listed company became Sun Taoran. Prior to this transaction, Guofeng Group directly held 16.10% of the shares in the listed company and was the controlling shareholder of the listed company. Ouyang Xu was the actual controller of the listed company. After the transaction was completed, Sun Taoran and Sun Haoran became the actual controllers of the listed company. Among them, Sun Taoran directly holds 24.21% of the shares of listed companies, Sun Haoran directly holds 3.39% of the shares of listed companies, Sun Taoran indirectly controls 0.54% of the shares of listed companies through the blue cursor, and Sun Taoran, Sun Haoran, and the blue cursor collectively control 28.14% of the shares of listed companies. Sun Taoran is a famous entrepreneur in China. He has founded many well-known companies in various fields, including “Beijing Youth Daily · Computer Times Weekly”, “Life Express”, “Outdoor Equipment”, Blue Cursor, Henkel, La Cala, etc. The industry is involved in various fields such as media, public relations, IT, and finance, and each company has developed into one of the most well-known enterprises in this field. 3. Overview of La Cala's business La Cala's core business is to provide third-party payment services to enterprise users and individual users, and to provide related value-added and financial services using payment as an entry point. La Cala obtained the first batch of “Payment Business Licenses” issued by the central bank in June 2012, and the first batch of pilot qualifications for the State Administration of Foreign Exchange to launch cross-border e-commerce foreign exchange payment services in February 2014. Lenovo Holdings, the largest shareholder in La Cala, is a financial investor and has no control over La Cala. Currently, no single shareholder can decide and have a substantial influence on the company's business policies and decisions on important matters.Therefore, the target company has no controlling shareholders or actual controllers. La Cala's business covers corporate billing, personal payments (credit card repayment, bank transfers, mobile recharge, convenient payment, etc.), credit (personal credit, small and micro enterprise credit), and credit information. It also provides various software and hardware product tools such as POS machines, mobile payment banks, multimedia self-service terminals, mobile card readers, and mobile apps to meet the diverse payment and financial needs of users. As of December 31, 2015, La Cala covered more than 2.7 million merchants, sold more than 4 million personal terminals, served about 100 million individual users, and established strategic partnerships with China UnionPay and more than 50 banks. 4. La Cala's profit model La Cala is centered on third party payment business, accumulates a large amount of payment transaction data through payment and billing services, uses big data analysis methods to explore data value, form credit assessment information for individuals and enterprises, and provide value-added financial services to consumers and merchants within the system. 5. La Cala's financial situation Third-party payment business accounted for more than 70% of La Cala's main business revenue in 2015. La Cala's payment users are divided into corporate merchants and individual users. La Cala provides billing services to enterprise users, and provides convenience payments, mobile payments, etc. to individual users. In terms of corporate collection, La Cala's share of revenue from corporate billing business increased significantly in 2015. The main reason is that since 2012, La Cala entered the business billing service market and entered the merchant sector earlier, had a strong first-mover advantage in the industry, and had a good reputation among merchants. Since 2014, La Cala has taken advantage of the window period of changes brought about by industry regulation in the corporate billing market, and has continued to expand its market share. The amount of transactions in the collection business has increased from 224 billion yuan in 2014 to more than 900 billion yuan in 2015, an increase of more than 300 percent. La Cala Bank's card collection business is at the forefront of the industry. In terms of personal payments, La Cala's personal payment business provides users with personal financial and lifestyle payment services such as credit card repayment, transfer and remittance, recharge and payment, bill payment, and bank card balance inquiries. Although La Cala's personal payment business was affected by Alipay and WeChat Pay to a certain extent during the reporting period, La Cala maintained steady development in the field of personal mobile payments, and personal payment transactions maintained a stable level. According to Yiguan Think Tank's monitoring data for the 3rd quarter of 2015, La Cala ranked third with a market share of 6.01% after Alipay and Tenpay. In terms of hardware sales and service, hardware products sold by La Cala are divided into hardware products for corporate billing and hardware products for personal payment. Hardware products for corporate billing services include POS machines, mobile payment banks, and cloud POS. Hardware products for personal payment services include La Cala payment bracelets, convenient payment terminals, and mobile card readers. La Cala's consolidated gross margin increased steadily in 2014-2015, to 51.18% and 56.09%, respectively. The main reason is the increase in the share of gross profit income from high-margin companies taking orders. In 2015, La Cala's corporate billing business increased dramatically, providing merchants with high handling fee services, so the gross margin of the corporate billing business in 2015 was higher than in 2014. La Cala's personal payment business was impacted by Alipay, WeChat Pay, etc., and the company adjusted its business strategy and gradually reduced the cost investment in personal payment business. As a result, both gross profit and gross margin declined. The gross margin of hardware sales and services has also declined, mainly because the target company has reduced the gross profit of POS equipment sold to merchants in order to vigorously expand the corporate billing business. The gross margin of other businesses increased significantly, mainly because the financial business launched in 2015 increased the gross profit of other businesses. In 2014-2015, La Cala's net profit attributable to shareholders of the parent company was -195.16 million yuan and 127.37 million yuan respectively. The sharp increase in net profit in 2015 was mainly due to: 1) the sharp increase in the billing business of high-margin enterprises and the business that provided high handling fees to merchants; 2) the contribution of value-added financial services, mainly credit services, increased sharply; 3) sales expenses declined, and the number of business sales staff declined. The counterparty promised that the amount of net profit achieved by La Cala in 2016, 2017, and 2018 (net profit attributable to the shareholders of the parent company after deducting non-recurring profit and loss from non-recurring profit and loss, and the cumulative income generated during the period after raising supporting capital) would not be less than 450 million yuan, 860 million yuan, and 1.45 billion yuan, respectively. 6. La Cala's industry position and core competitiveness La Cala obtained the “Payment Business License” issued by the central bank in June 2012, and was one of the first 27 third-party payment companies to obtain a payment license. In 2015, the scale of La Cala bank card transactions exceeded 900 billion yuan, and La Cala's bank card billing business is in a leading position in the industry. According to the “China Third-Party Mobile Payment Market Quarterly Monitoring Report, Q3 2015” data released by Yiguan Think Tank, the overall pattern of the mobile payment market continued to be stable in the third quarter of 2015, and Alipay continued to occupy the top position in the mobile payment market with a market share of 71.51%; Tenpay ranked second, with a market share of 15.99%, an increase of 2.91 percentage points over the previous quarter; La Cala ranked third, with a market share of 6.01%, significantly higher than other competitors. As a leading comprehensive third-party payment company in China, La Cala has now formed a core competitive advantage in terms of third-party payment services, offline channel service capabilities, risk management, and fund settlement systems, as reflected in: 1) A comprehensive service platform centered on third-party payment services. Since its establishment, La Cala has focused on third-party payment services. So far, it has covered more than 2.7 million merchants, served about 100 million individual users, and paid transactions in 2015 exceeded 1.6 trillion yuan. 2) Offline channels and service capabilities based on years of convenience and billing business accumulation. After more than ten years of development, with strong capital strength and an efficient offline execution team, La Cala has established an omni-channel layout from offline to online. Currently, it has accumulated more than 2.7 million merchants and has served about 100 million individual users. 3) Stable risk management and fund settlement system. Based on the payment business, La Cala continues to iteratively upgrade derivative financial products and services such as credit and credit information, and has established its own unified account system to meet the diverse and comprehensive needs of users. La Cala has an industry-leading and efficient fund clearing system. The system design has a peak processing capacity of 800-1,000 transactions per second; the average processing time of each transaction is 0.3 seconds; the system satisfies 7*24 hours of service, has automatic error correction capabilities, and its operational reliability is 99.9%. 4) Industry-leading innovation capabilities. Since its establishment, La Cala has always focused on R & D investment and on improving technological innovation capabilities. After more than ten years of development, La Cala has become China's leading third-party payment company, with leading advantages in product innovation, system stability, and technical strength. 5) Comprehensive license advantages. La Cala obtained the first batch of national “payment business licenses” issued by the central bank, and obtained the first batch of pilot qualifications from the State Administration of Foreign Exchange to carry out cross-border e-commerce foreign exchange payment services. La Cala's shareholding company became one of the first companies to obtain “the qualification to carry out preparation work for personal credit information business.” 6) Significant brand advantages and industry influence. After more than ten years of development, La Cala has accumulated rich experience in the payment industry, accumulated a large amount of high-quality user data, and continuously innovated and enriched financial services and product categories, expanded service application scenarios, and gradually developed into a comprehensive service platform with payment as the core, enjoying high brand awareness and industry influence among merchants and consumers. 7) Excellent and excellent management team. The core team members all have more than ten years of work experience in the Internet industry. Mr. Sun Taoran, founder, chairman and general manager of La Cala, has 20 years of experience in Internet enterprise management and operation. 7. After the completion of this transaction, the listed company added third party payment services in addition to the traditional tourism industry, creating a dual main business model. There is synergy between listed companies and La Cala in many areas: 1) Listed companies can rely on La Cala's active payment account system and more than 2.7 million partner merchant outlets to form direct sales channels and user traffic entrances for online and offline Tibetan tourism products. At the same time, La Cala has served a total of about 100 million individual payment consumers, and can provide strong support for increasing the number and efficiency of visitors to scenic spots for listed companies through tourism product channels such as O2O. 2) La Cala can develop consumer finance services through travel consumption scenarios. Online travel products can help increase the application scenarios of La Cala payment services, effectively increase the stickiness of payment users, and form a benign comprehensive payment ecosystem. Furthermore, La Cala can develop small and micro credit services for small and micro enterprises in the Tibet region. 8. Investment suggestions: As the only listed tourism company in the Tibet Autonomous Region, the company mainly operates scenic spots, is complemented by the tourism service industry and advertising media and cultural business. It is affected by the tourism environment in the Tibet region, and its performance growth momentum is insufficient. La Cala is the leading inclusive financial service platform in China with third party payment services as the core. La Cala's 100% equity price is 11 billion yuan, and it promised to achieve a net profit of 450 million yuan in 2016, with a corresponding price-earnings ratio of 24.44 times. After this acquisition, listed companies quickly entered the third-party payment industry, broadened the business scope of listed companies, and helped enhance the ability of listed companies to continue to operate. The company currently has a stock price of 2,434 yuan, a total share capital of 198 million shares, and a total market value of 4.5 billion yuan. After the transaction is completed, the total share capital will reach 940 million shares, corresponding to a total market value of 22.9 billion yuan. According to performance promises and Wande's unanimous expectations, the 2016-2018 exam preparation net profit was 452 million yuan, 871 million yuan, and 1,473 million yuan, and the corresponding price-earnings ratio was 51, 26, and 16 times. We are optimistic that the company takes third-party payments as the core, accumulates a large amount of user data, actively expands comprehensive services such as credit and credit reporting, and creates a comprehensive financial service platform, with broad scope for market capitalization growth.