Incident: The company announced on November 29 that Hunan Tiantianshang Information Technology Co., Ltd., a holding subsidiary of Hunan Tuowei Education Development Co., Ltd., a wholly-owned subsidiary of Hunan Tuowei Education Development Co., Ltd., confirmed the winning bidder's comment of the “Changsha Education Business Management Platform Construction Project”: 1. We are optimistic about the certainty of K12's business growth. Hunan Tiantianshang Information Technology Co., Ltd., a holding subsidiary of Hunan Tuowei Education Development Co., Ltd., a wholly-owned subsidiary of Tuowei Information, confirmed as the winner of the “Changsha Education Business Management Platform Construction Project”. The winning bid reflects the company's ability to develop a basic education service management platform, which helps the company build a one-stop online learning platform for K12 education to provide richer and more comprehensive education informatization services for Tuowei Academy. We are optimistic about the certainty of K12 business growth in 2018. 2. Joining hands with Huawei to “work together in the same boat”, the public cloud business can be expected to grow. The company signed a strategic cooperation agreement with Huawei on December 7 to reach a mutual partnership in the same boat. Based on HUAWEI CLOUD, the two sides will cooperate deeply in solution building, service, and ecosystem construction to provide leading public cloud services to the government and enterprises. Tuowei Information is the first A-share partner to “work together in the same boat”. It uses HUAWEI CLOUD technology and channel resources to help the development process of the company's smart education platform project, while also using Huawei's hardware equipment to reduce the cost of deploying the education cloud. Furthermore, the company's independent game agency business will not only migrate and deploy to Huawei's public cloud, but is also expected to turn game content providers in Huawei's ecosystem into incremental customers. 3. The company's revenue grew steadily in the first three quarters. Judging from the interim report, the increase in the number of users of K12 and preschool education platforms led to a decrease in marginal costs, and the three major businesses of K12 education, preschool education platforms, and mobile games continued to gain strength during the reporting period. The company currently has strong education channels, focusing on high-quality educational content and services, and opening up in-school, off-campus, online and offline education businesses. The gross margin of the education business reached 68.29% in the first half of 2017. We believe that the steady increase in the company's revenue in the third quarter is still due to the strength of the company's education business. Judging from the company's three-quarter report, the company's education-related products will continue to invest in manpower and brand building costs, further building the company's core competitiveness and expanding education business. 4. Investment advice: maintain “Highly Recommended - A”. The company's strategic layout is “Tuowei Academy (K12 Education Platform)”, “Cloud Baby (Preschool Education Platform)” and education informatization. R&D and brand development continue to gain strength. Combined with joining the cloud ecosystem led by Huawei, we are optimistic about the company's future expansion and growth space in the three major businesses of K12 education, preschool education platforms, and mobile games. The estimated net profit for 2017-2019 exam preparation is 257 million yuan, 331 million yuan, and 419 million yuan respectively. The 2018 valuation is 30 times -40 times, and the corresponding target price is 9 yuan/share - 12 yuan/share. Maintaining “Highly Recommended - A”, the current market capitalization is 8.6 billion yuan, corresponding to PE 33.4 times, 26.0 times, and 20.6 times, respectively. Risk warning: The market expansion of the education business falls short of expectations, and the risk of integration of mergers and acquisitions.