Hongyuan corporate template announcement matters: On April 10, the company and Shanghai Liangcai's shareholders Huang Yiqing and Zhu Haiyan signed a “Security Deposit Agreement on Transfer of Shares in Shanghai Liangcai Information Technology Co., Ltd.” to transfer 27.5% of each of the two shareholders, for a total of 55%, through the wholly-owned subsidiary Variety Technology. Based on the equity transferor's exclusive agreement on the share transfer in the “Letter of Intent” and the sincerity of cooperation on the share transfer matter, Variety Technology paid a security deposit of 35 million yuan to the equity transferor in order to facilitate the smooth progress of this equity acquisition. Incident review: On February 19, the company and Shanghai Liangcai shareholders involved in the lottery industry signed a “Letter of Intent on Share Transfer” to acquire their shares, but the acquisition ratio was not determined. In 2013, Shanghai Liangcai achieved operating income of 308.656 million yuan and net profit of 1438.1 million yuan. Although the growth rate of lottery ticket sales has slowed in the past two years, sports lottery has successfully countered with high frequency and competitive lottery. The total sales volume of Chinese lottery in 2013 reached 309.3 billion yuan, an increase of 18.29% over the previous year, and a slight increase of 0.18% over 2012. However, in 2009-2012, the growth rates of lottery ticket sales in China were 24.91%, 25.53%, 33.21%, and 18.11%, respectively. The growth rate in 2012 and 2013 was within 20% for two consecutive years, and the growth rate slowed markedly. The main reason was that the two-color ball, which accounted for a relatively high share, grew at 0 due to the low prize pool amount. At the same time, the total sales volume of sports lottery increased by 20.19% year on year, surpassing Fucai by 3.55 percentage points and accounting for 42.93% of total sales. Among them, high-frequency and lottery sales increased by 43.40% and 32.30% year-on-year, respectively. Sports Lottery was launched in 2009. Over the past five years, its growth rates have been 4464%, 103.28%, 39.51%, and 32.30%, respectively. For five consecutive years, Sports Lottery has maintained a very high growth rate, so we have reason to think that the upcoming World Cup will be 2014 a big year for sports lottery. With the gradual implementation of epitaxial mergers and acquisitions, the company's lottery journey is on the right track. Shanghai Liangcai has good cooperative relationships with national lottery and sports lottery organizations, and has leading paperless lottery technology. After the equity transfer, the company will own 55% of the shares in Liangcai, achieve a shareholding merger, and effectively implement the layout of the Internet lottery industry chain. Risk warning: Risks such as marketing falling short of expectations. Profit forecasts and valuations. We expect the company's 2013-2015 EPS to be -0.60 yuan/0.22 yuan/0.41 yuan, respectively, giving it an “increase in holdings” rating for the first time.