Key investment events: On October 27, Tangde Film and Television disclosed the results of its three-quarter report. The company's net profit for the first three quarters was 122 million yuan, up 23.16% from the same period last year; operating income was 529 million yuan, up 30.80% from the same period last year; and basic earnings per share was 0.3 yuan, up 20.00% from the same period last year. Comment: Tangde Film and Television's performance in the third quarter of 2017 was mainly contributed by the top drama “That year, the flowers bloomed and the moon was perfect”. The ingenious TV series had high distribution revenue and gross profit margin. “That year, the flowers bloomed and the moon was full” was broadcast for the first time on Oriental TV and Jiangsu TV since August 30, and was broadcast exclusively by Tencent Video on the online platform. Since its inception, various data indicators have shown the value of top-tier content: TV ratings have soared to over 3% (single TV); in the October 8 finale, the ratings of Oriental TV and Jiangsu Satellite TV reached 3.396% and 2.137%, respectively, with a total market share of 17%; the online broadcast volume went high. As of October 29, the drama's online broadcasts reached 12.55 billion, and the highest number of VVs broadcast on a single day reached 400 million; Douban's historical ratings reached 8.5 billion; and the number of people reading on Weibo related topics exceeded 15 billion. “Win the World” was defeated, and “Orient Palace” was launched. Major dramas are expected to be completed one after another. The company's leading producer of premium content truly deserves its name. According to information from Winning World's official blog on September 19, the show was officially screened for a total of 282 days, with a total cast and crew of over 2,300 people, a total of 258 major scenes, 568 small scenes, and 2,895 scenes. A total of 2,895 scenes were filmed. The total number of costumes was over 7,000, the total number of props was over 60,000, and the total setting area was 80,000 square meters. It was an excellent work. According to Tang De Film and Television's WeChat account, “Orient Palace” was officially launched on August 9. The drama is an IP adaptation of the long-form romance novel of the same name written by Pang Siu Chuen, and stars the new generation of actors Peng Xiaoran and Chen Xingxu. In addition, the company plans to film and invest in 5 film and television projects in the fourth quarter of 2017, namely “A Basket of Parents”, “Singularity”, “Living with Children”, “People in Beibu Gulf”, and “Anaya Romance”. We believe that Tangde Film and Television has proven its strength with phenomenal works in the field of leading and quality content creation. At the same time, the company has a reserve of leading content, so it will still benefit from the premium value of leading content in the future. Debt issuance and fixed increases are expected to enhance the company's cash liquidity, thereby enhancing participation in film and television projects. The 36th meeting of the second board of directors of the company held on May 19, 2017 and the 2017 Third Extraordinary General Meeting of Shareholders held on June 13, 2017 were reviewed and approved. The company plans to issue corporate bonds with a scale not exceeding RMB 600 million (including 600 million yuan). On October 16, 2017, the company received the “Feedback Letter on Zhejiang Tangde Film and Television Co., Ltd.'s 2017 non-public corporate bond transfer confirmation materials”. Currently, the company is actively implementing the feedback. At the same time, the company's fixed growth plan has been actively promoted. We believe that Tang De Film and Television is expected to ease the company's financial pressure through debt issuance and fixed growth, while increasing participation in future film and television projects. Tangde Film and Television began to show performance growth in the third quarter of 2017. We expect the company to show rapid performance growth throughout 2017. The company's 2017 performance was mainly contributed by the film and television drama business. The mid-term report period has confirmed sales of TV dramas such as “Flowers and Distances”, “The Plan”, and “Dear, Long Time No See You”. Although the above movies and TV series projects are small, they have received a high level of gross profit due to their excellent quality; in the third quarter, the performance was mainly confirmed by “That Year's Flowers and the Moon Blossoms”. Due to the value of its top headlines, the drama has high distribution revenue and gross profit margin; in the fourth quarter, we expect the company to confirm the top blockbusters of the year “Win the World”. Currently, the drama has already finished filming and is in its later stages At the production stage, the drama's online copyright has been sold to Tmall Technology for 8 million (broadcast platform is Youku Tudou). The development prospects of Tangde Film and Television are improving, and we continue to focus on recommendations. We believe that the fundamentals and performance of Tang De Film and Television are on the rise and with high certainty. At the same time, it has an advanced strategic layout pattern. The content production side has already entered three major fields, and each field has phenomenal project reserves (quality dramas, movies, and variety shows). At the same time, Tang De is actively targeting offline channel layout (cinema). Currently, the theater layout is in the early stages, and is expected to become a new growth point for the company's business and performance in the future. Future business highlights of Tangde Film and Television: In terms of quality dramas: We expect that “Win the World” in 2017 will bring Tang De 655 million in revenue, which will be an important support for the company's 2017 performance. In addition to “Win the World,” the company also had “That Year When the Moon Blossomed” in 2017 to verify its ability to create top-tier content, so Tang De's performance for the full year of 2017 is expected to grow rapidly. According to the analysis of the launch situation of film and television projects, the company plans to launch 6 movies and TV series in the second half of 2017, which is expected to become a reserve project in 2018. On the film side: We expect Tang De to have 2-3 small-cost films in reserve in 2017, while preparing to launch 4 films in the second half of the year and introduce 2 films to assist in promotion. We think that 2017 will be Tang De's movie year, but the 2018 film sector is expected to exceed expectations and become a new addition to the company's continued high performance growth in 2018. In terms of variety arts programs: In 2017, the company focused on the planning, production and operation of “The Voice of China”, “No Love”, and “Charity C Plan”. After Tang De purchased the copyright for “The Voice of China” in January 2016, we expect the company to create the “Voice of China” series of variety shows for 4 consecutive years starting in 2017. Referring to the brand effect of “The Voice of China” over the years, and taking into account that Tang De has little experience in the field of variety shows, we expect that in 2017, Tang De will invest more human, energy and financial resources in the “Voice of China” section to achieve a high reputation and market effect. Therefore, we expect the project to bring limited profit to the company in 2017, but starting in 2018, the brand value of this project will gradually be reflected, becoming a new addition to the company's continued high performance growth after 2018. Meanwhile, in 2017, Tangde and Talpa will also jointly develop and operate multiple variety shows, which is expected to quickly gain experience in variety program operations for the company. On the cinema line side: On April 11, 2016, Tangde Film and Television issued an announcement to jointly invest in the establishment of Shanghai Tangde Cinema Management Co., Ltd. with Mr. Zhao Jun to launch offline channel layout. Mr. Zhao Jun is a top talent in film distribution and cinema management in China. He has been in the business for 38 years. He has rich industry experience, networking resources and industry prestige in related fields, and is an important driver for the marketization of Chinese film distribution. On March 17, 2017, it was once again announced that the wholly-owned subsidiary will join hands with Tianxi Tianyou and Zhi Da Xiang to establish Happy Planet. We believe that while developing the content sector, Tangde Film and Television is developing on the cinema channel side, it is expected that it will create a “content+marketing+channel” layout and break through the bottleneck of relying solely on content for profit. However, since Tangde Film and Television's cinema business is still in the early stages of layout, and the business is currently operating outside of the listed company, we expect the company to take 3 years of cultivation, and it is expected that it will contribute profits to the company starting in 2019. Profit forecast and investment advice: Profit forecast: Referring to the film and television projects that Tangde plans to invest in production in 2016 and 2017, we expect Tangde Film and Television to achieve net profit attributable to the parent company of 380 million yuan and 560 million yuan respectively in 2017-2018. According to an estimate of the company's current total share capital of 400 million shares, we expect the company's EPS for 2017-2018 to be 0.95 yuan and 1.4 yuan, respectively. Investment advice: We believe that in the future, Tang De Film and Television will perform well in the fields of phenomenal leading content (TV series, movies, variety shows), channel resource layout, artist agency business upgrade, Internet new media exploration, overseas strategic layout, and pan-entertainment platform construction. The company has used the capital market to enter a new stage of rapid growth, and is expected to become a dark horse in the media sector. Referring to the total share capital of 400 million dollars after the listing of the additional shares, we gave a target price of 37.5 yuan, a purchase rating. Risk warning: “Winning the World” and other films were recorded less than expected; the results of “The Voice of China” fell short of expectations; the impact of A-share market sentiment and financial aspects; regulatory policy risks; and the risk of declining profitability due to rising production costs for film and television content.