Key investment points: Strengthen the main publishing business and achieve steady growth in performance. The company announced its 2017 three-quarter report. From January to September 2017, it achieved operating income of 6.7 billion yuan, a year-on-year decrease of 35.44%; realized net profit to mother of 522 million yuan, an increase of 28.1% over the previous year. In specific segments, the publishing business achieved revenue of 1.02 billion yuan, an increase of 13% over the previous year; the distribution business achieved revenue of 2.05 billion yuan, an increase of 8% over the previous year; and the material sales sector achieved revenue of 4.08 billion yuan, a decrease of 51%. Due to the contraction in the scale of the trade business, revenue declined, but the quality of business was effectively improved. The gross margin reached 17.88%, an increase of 6.87 percentage points over the previous year. Actively promote transformation and upgrading, and present new highlights in innovation and development. The company leverages the unique content and brand resources of each subsidiary (branch) company to actively explore innovative developments in marketing, industry, business formats, etc., strengthen social store interaction, online and offline interaction, and promote industrial transformation, integration and expansion. The main business development space has been broadened, industrial expansion has achieved results, and transformation and integration have been accelerated. The distribution of general books and textbooks has maintained steady growth; Xiyuan Press has completed business changes, asset delivery and team building, and is on the right track; iCube successfully entered the “New Third Board” innovation layer list; Hubei Science and Technology Society's “Green Finger” project has actively explored industry extension; Hubei Xinhua Bookstore Group has made breakthroughs in educational equipment, education services, and government procurement; Digital Publishing Company's “two courses” platform and digital content processing business. Bosheng's “two courses” platform and education and training service projects have had a certain impact on micro-media integration. Innovation is showing in the beginning Results; Xinhua Printing promotes smart factory transformation projects. We believe that transformation and upgrading and promoting innovation have injected new vitality into the company, and performance growth can be expected soon. Build a well-known brand and give full play to the advantages of network channels. The company has received a total of 38 national book publishing awards, undertook a number of national and provincial key cultural projects, and became a similar domestic publication brand. The Hubei Xinhua Bookstore Group, which belongs to the company, is the largest state-owned book distribution enterprise in Hubei Province and the “National Top 100 Service Industry Enterprises”. It has built 77 distribution branches and 394 distribution outlets. It has exclusive distribution rights for primary and secondary school textbooks in Hubei Province, ranking 7th in the same industry in the country. In recent years, the company has increased the construction of comprehensive physical bookstores and opened a number of specialty bookstores such as Jiuqiu Library and Yangtze River Bookstore. The company actively exploits strong network channel advantages to build well-known brands and promote performance. Profit forecast. The company's future highlights: 1) Industrial transformation and integration, expansion of main business space, and performance growth can be expected; 2) Online and offline resources are gathered and brand effects are strengthened; 3) Innovative development exploration begins, and the company injects new vitality to support performance growth. We gave the company 0.60 yuan, 0.67 yuan, and 0.76 yuan for the 2017-2019 EPS. Also, considering that companies in the same industry, Times Publishing, Dadi Media, and Zhongnan Media expect PE to be 16 times, 15 times, and 14 times respectively in 2017. We gave the company 15 times PE in 2017, and the target price was 9.00 yuan, maintaining the purchase rating. Risk warning. The performance growth rate of traditional industries has declined. Centralized release of systemic risks in large markets