Key investment points: Preparing acquisitions to absorb high-quality overseas resources, and the global home operator strategy has progressed further. Dr. Pang issued an announcement on November 14. The board of directors reviewed and passed the merger and acquisition bill: the Canadian subsidiary plans to acquire 100% of Urban Networks Inc. (Urban Networks Inc.)'s shares for 14.61 million Canadian dollars; the Hong Kong subsidiary plans to acquire 93% of PLD (PLD Holdings Limited) shares for 90 million US dollars. The company completed the issuance of US dollar bonds in the first half of the year, and then passed two overseas mergers and acquisitions by the board of directors, showing its determination to actively go overseas and lay out globally. Along with the rapid progress of Dr. Peng's global backbone network construction, and previous investments have ushered in a period of harvest (Internet business overseas achieved 44.08% growth in 2016). It is expected that the company will be more comfortable as it continues to promote the internationalization process in the future. The IDC industry pattern at home and abroad has been profoundly adjusted, and the company has transferred shares in CITIC Network to acquire Pentium 1, solidifying the pipeline foundation for the cloud business. The IDC industry is driven by the supply-side of industries such as cloud computing, broadband acceleration, and Internet traffic growth, and the combined effects of demand factors for Internet services in various fields under the “Internet +” mentality. We expect future data centers to be large-scale and centralized. As the cloud computing industry chain gradually exploded in different regions, the distribution structure of very large data centers moved from North America to the Asia-Pacific region. Driven by both policy and industry factors, the domestic front-line IDC industry is undergoing profound adjustments. The company, as a third party, issued a foreign investment announcement on September 28 and plans to transfer 49% of CITIC Network's shares at a reserve price of 1,338 billion yuan. Apart from the three basic operators, CITIC Network is the only basic telecommunications service operator that has legal qualifications to operate fixed network dedicated line circuit services. The backbone network “Pentium 1” it owns has a national optical fiber with a route length of 32,000 kilometers, which greatly enhances the company's basic broadband provision capacity and helps the company make full use of the broadband+IDC business synergy. The company is steadily advancing the “Global Cloud Network Platform” strategy launched in '16, and value-added products have brought rich benefits. Based on cloud service capabilities, the company implemented Damai Box (more than 5 million users, payment rates are gradually rising) and the Pengyun series of value-added products (including “Pengyun Video” won the 2017 China ICT and “Internet +” Application Outstanding Achievement Award) into the “Smart Home Ecosystem” to help the company transform and upgrade to a global home operator in the all-media era. In June 2017, Dr. Peng officially released the global carrier-grade SD-WAN (Software-Defined Wide Area Network) service, Pengyun SWAN, for application scenarios such as enterprise connectivity, hybrid cloud connectivity, and SaaS access optimization, becoming the first telecom operator in China to provide SD-WAN services. Give it a “buy” rating. We expect the company's operating income in 2017-2019 to be 9901 billion yuan, 11.371 billion yuan, and 13.187 billion yuan respectively; net profit attributable to shareholders of listed companies will be 844 million yuan, 1,022 million yuan and 1,227 billion yuan, respectively; EPS will be 0.59 yuan, 0.71 yuan, and 0.86 yuan, respectively. The company's cloud business is currently progressing smoothly and profits are being released faster than expected. At the same time, we are optimistic about the company's future long-term development under the guidance of the “ultra-bandwidth cloud, management, and terminal” strategy. Referring to the average valuation level, the company's 2018 dynamic PE is 35 times, corresponding to a target price of 24.85 yuan for 6 months, maintaining a “buy” rating. Risk warning. Competition in the broadband market has intensified, and the cloud business has fallen short of expectations.