Investment highlights: The company announced its 2017 semi-annual report: The company achieved operating income of 846 million yuan, an increase of 15.3% year on year, and net profit of 91.4817 million yuan to mother, an increase of 10.6% year on year, equivalent to EPS 0.096 yuan/share. The company achieved revenue of 420 million yuan in a single quarter, up 16.3% year on year, and net profit to mother of 43.4844 million yuan, an increase of 9.9% year on year. The company expects the net profit range to be 1.15-150 million yuan for the 2017-Q1-3 quarter (year-on-year increase of 0%-30%). The fixed increase was successfully completed. The total capital raised was 1,093 billion yuan through the issuance of 888.618 million shares, the net capital raised was 1,061 billion yuan, and the issue price was 12.30 yuan/share. The total share capital of the company after the fixed increase was 1,045 million shares. The issuance was all subscribed in cash. The targets were Guangzhou Xinhua City Development (487.805 million shares, amount: 600 million yuan) and Guangzhou China Life Insurance City Development (40.8813 million shares, amount: 493 million yuan), which were locked in for 12 months. After the issuance, the Guangzhou State-owned Assets Administration Commission held 782 million shares, down from 81.9% to 74.9%, and is still the controlling shareholder of the company. Main business structure optimization, R & D+production+sales piano business model, and acquisition of Schimme to increase revenue levels and profitability. The company's revenue and profit performance was steady and the growth rate increased. The acquisition of German company Schimme was included in reporting and business structure optimization, while the digital musical instrument and culture industry became a revenue growth point. The company's comprehensive gross margin was 32.9% (up 2.98 percentage points), of which the piano product business accounted for 89.7%, and the gross profit margin was 33.9% (up 3.94 percentage points). In recent years, global production of traditional pianos has basically stabilized at around 500,000 units, and demand for high-end pianos is showing an increasing trend. Product: The company has built a high, medium, and popular brand system with strong international competitiveness in all grades, comprehensively promoted the Schimme project, established a new Schimme domestic marketing network, and deepened the integration of upstream and downstream industrial chains to enhance the influence of Pearl River pianos. Sales: The company's main business developed well during the reporting period, with timely payment recovery and an increase over 2016. The company produced and sold more than 70,000 pianos. The product structure was continuously optimized, and the sales volume of Fort Caesars pianos maintained double-digit year-on-year growth. Channel: The company has established a R&D+production+sales piano business model. It cooperates with dealers and has more than 360 and 230 domestic sales and service outlets respectively, all up from the end of 2016; the international market share is over 35%, and the global market rate is over 25%, with Asia, Europe and the US as the core, with more than 200 sales and service outlets spread across more than 100 countries and regions. Digital pianos are rich in the main business, and Amoson is expected to apply for a new third board listing to enhance its strength. The company mainly develops digital piano business through its holding subsidiary Amoson, and has technical cooperation with famous Japanese and Italian digital musical instrument companies, mastered international technology, completed the development and application of fourth-generation digital piano sound sources. The flagship products F-13 and P-200 portable digital pianos were officially launched, and cooperated with Zhujiang Eno to develop a new 6+1 music classroom to explore the Internet digital piano model. In the future, Amson will speed up the securitization process. After applying for listing on the new 3rd board, it will expand its development through 2 fund-raising projects for digital piano keyboards and portable digital pianos. Increased efforts are being made to strengthen the main business, and cultural industry projects are progressing steadily. The company's fixed capital increase will be used for the Guangzhou Cultural Industry Innovation and Entrepreneurship Incubation Park project, the Zengcheng National Cultural Industry Base Project (Phase II), the National Culture and Art Education Center construction project, the Pearl River Musical Instrument Cloud Service Platform construction project, and supplementary working capital. Through fund-raising, the company will further strengthen its main business, expand the cultural service industry, accelerate the transformation and upgrading of the company to advanced manufacturing and cultural services, further optimize the business structure, enhance the company's profitability and sustainable development capabilities, which is conducive to enhancing the core competitiveness of listed companies. As a key target of Guangzhou's state-owned enterprise reform, the company is expected to enjoy policy dividends and subsequently serve as a resource integration platform for related assets. Investment in art education has maintained rapid growth, and the brand system has been promoted throughout the country. The company accelerated the development of the art education industry through industrial operation and capital operation; during the reporting period, the first batch of members of the Guangzhou Culture Shanghai Company Industry Alliance was established to promote the construction of art education outlets. The Jinan Central Store and the Foshan flagship store have already opened, and the Pearl River Piano Beijing Art House is about to be built. Set up a culture and art company to create an integrated ecosystem of musical instruments, education, online and offline channels, and internet platforms. The cultural media industry actively explores and explores new highlights in the cultural industry. The company mainly develops film and television business through Zhuguang Media Company, media business through Badoumi, and initiated the establishment of a media fund. 2017H1 Zhuguang Media invested 10.5 million yuan in new film and television projects, successively investing in projects such as “Blue Lotus” and “Cruise Affair”. In the future, the company will continue to improve the media business governance structure, give full play to the role of a media fund platform, and enhance the profitability of the cultural sector. The product structure continues to be optimized, high-end piano brands set sail, and independent brands have built up their own brands, acquired high-end European brand Schumier, and improved the brand gradient. Focusing on the Internet+ art education and value service system, art education will advance broadly in the future. For those scarce targets of Guangzhou's state-owned assets reform, additional efforts will be made to strengthen the transformation and upgrading of cultural services. The company currently has a market value of 12.3 billion yuan. We maintain the company's 17-19 EPS to 0.17 yuan, 0.19 yuan, and 0.23 yuan, respectively. The current stock price (12.91 yuan) corresponds to the 2017-2019 PE of 76 times, 68 times, and 56 times, respectively. We are optimistic about the development direction of the company's long-term comprehensive industrial layout of high-end musical instrument manufacturing, music education, cultural finance, and media industries. The fixed price (12.30 yuan) provides a margin of safety and maintains growth.