Events:

The third Plenary session of the 18th CPC Central Committee made a decision on comprehensively deepening reform, involving the reform of cultural state-owned enterprises, and proposed that cultural state-owned enterprises can carry out institutional innovation through "special management units".

Comments:

The creation of a "special management unit" to solve the problem of incentive mechanism of state-owned media enterprises will awaken the cultural state-owned assets that have been sleeping for many years. Under the new system, cultural state-owned enterprises, including companies, will optimize and improve their operational quality, management performance and business space, and increase the vitality of the media sector.

We believe that the next step of the company's expansion will be carried out along two lines: one is the integration and optimization of asset operations, and the other is to carry out attempts in the field of all-media and cultural and creative industries. According to the company's announcement at the end of October, the Chengdu Square project, which has been in reserve for many years, has become a cultural asset of Xinhua Media. The project is located in Hongqiao, a key development area in Shanghai. According to the plan, it will be built into a commercial and cultural Mall, which integrates culture, commerce, entertainment and performing arts, and becomes a new cultural landmark in Shanghai. This project is in line with one of the three major transformation directions established by the company-the direction of "cultural space". It has gained experience in development and operation, and can replicate similar cultural projects in the next 2-3 years. In the two transformation directions of media service and new media platform, the reform exploration of Zhejiang Daily Media, Guangdong Media and other listed companies based on the newspaper industry can also be used for reference.

With regard to the highly anticipated asset injection in the market, we believe that the follow-up development of the Shanghai newspaper Group will take the newspaper industry as the starting point, develop into the field of new media, cultural and creative industries, and broaden the business space. gradually develop from a newspaper group to a multimedia and all-media group, and become a professional, market-oriented and international large-scale comprehensive cultural media group. Is in line with the group's political status, market position, business basis of a path. As the capital platform of Shanghai newspaper Group, Xinhua Media Company is also one of the most important listed cultural enterprises in Shanghai. It has a prominent position, high political and social expectations, and industry attention and demonstration significance. Therefore, we believe that the group will be cautious about the company's integration and follow-up development, and come up with an optimal plan under comprehensive investigation and overall consideration to promote the strategic promotion of listed companies. It not only continues to improve business quality and performance, but also makes a good start for the long-term transformation. We expect to see more points in the follow-up.

Investment suggestion: it is predicted that the EPS from 2013 to 2015 will be 0.16,0.17,0.19 yuan. It is suggested that we should pay attention to the progress after the integration and reorganization of Shanghai newspaper Group, and the follow-up plan for deepening the reform of state-owned enterprises in Shanghai is expected to serve as a short-term catalyst. Increase the rating, target price 12 yuan.