Matters: At present, the company's various businesses continue to advance. We compare the company with comparable companies around the world and believe that the value of the company's assets is underestimated. At the same time, the extension of the earlier announcement and the acquisition of shares in CITIC Network also played a part in repairing the company's asset valuation. Comment: The company's EV/EBITDA is below the industry level, and many assets need to be mined. Judging from the horizontal comparison of financial data with international peers, the company's current valuation is below the industry average. Considering the company's global development strategy, we compared the valuation situation of the company in the international industry (Wind's global diversified telecommunications business sector) and excluded negative values and empty values. The average and median EV/EBITDA values of the industry were 19.72 and 7.56, respectively. Dr. Peng's corporate multiplier value is 7.31, which is lower than the industry average. Considering that the company's EBITDA profit margin has continued to grow in recent years and that the EBITDA growth rate is higher than that of the three major domestic operators, the company's value needs to be further increased in the future. According to data from the 2017 mid-year report, the company's EBITDA reached 1,813 billion, and the EBITDA profit margin reached 20.80%. Compared with 2016, it is still higher than the three major operators (China Unicom 16.75%). The reason why the company's value is underestimated at the high EBITDA profit margin level is mainly due to the company's recent business development and strategy implementation. The value of many of the company's assets has not been discovered by the market, and there is an urgent need for revaluation. (1) The company's fixed network business has huge potential. Among them, “Pentium One” will continue to exert its advantages. The company previously announced that it plans to participate in 49% of CITIC Network's equity matters. “Pentium One” provides a basic support network for the company's broadband business, which is an important guarantee for the smooth progress of the company's “Global Home Operator” strategy, saving Internet network settlement costs and reducing reliance on operators' backbone networks; externally, “Pentium One” may cater to the burgeoning IDC exchange and hybrid cloud connectivity business needs, giving the company new growth impetus. Compared to HGC's premium sales, the fixed network resources of the “Pentium One” that Dr. Peng will soon own are superior in terms of length, coverage, number of users, and transmission capacity, etc., and the potential value of the assets is huge. (2) The company's cloud computing business is gradually transforming, and the convergence effect is significant under the integration of network and content resources. In the past two years, in addition to providing data center facilities and services, the company has also actively implemented a strategic transformation from a resource provider to a platform and application service provider. Currently, apart from operators, there are few companies in the market that can simultaneously provide IDC and backbone network resources nationwide. This is Dr. Peng's advantage, which will be reflected in every link in the data center industry chain, and in the choice of enterprises for cloud service providers. Therefore, the integration effect of network resources and data center resources is one of the potential values that the company has not been able to reflect on its books. Furthermore, the company has a large number of users. Under the collaboration of “cloud, management, and end”, by providing better services, it is expected that the ARPU value will continue to increase, and the company's profit level will be further enhanced. With the expansion of overseas business and the improvement of the global landscape, the company's existing resources are expected to continue to be integrated, play a greater role, and have more room for imagination in future development. (3) The company's globalization strategy is being implemented steadily, and overseas investment accelerates network transmission layout. Against the backdrop of a red sea in the domestic broadband access market, the company launched a “global home operator” strategy to accelerate the expansion of overseas business through two overseas investments. The year-on-year growth rates of overseas business revenue for the full year of 2016 and the first half of 2017 were 2544.42% and 62.63%, respectively, indicating the initial results of the globalization strategy. In November 2017, the company issued two announcements. One is that Dr. Peng Holding Canada, a wholly-owned overseas subsidiary, plans to acquire Urban for 14.61 million Canadian dollars in cash. On the one hand, it enables the company to obtain the optical fiber network already built by Urban in downtown Vancouver, Canada, which helps the company absorb high-quality resources from overseas and form synergies at home and abroad. On the other hand, the latest construction cost of an optical fiber network is higher than its replacement cost, and acquisitions can obtain high-quality resources at a lower cost. Second, Dr. Peng Holding Hong Kong Limited, a wholly-owned overseas subsidiary, plans to use 90 million US dollars in cash to acquire 93% of PLD's shares. The project may promote cooperation between Dr. Peng and well-known international Internet vendors, which is beneficial to the company's future development. Taken together, the company's two overseas acquisitions are in the field of network transmission, mainly based on the company's globalization strategy and driven by high growth in international transmission demand. It is expected that the future will bring new growth points to the company and drive the company's revaluation. (4) Changes in the company's accounting estimates to restore the true profit level. On September 30, the company re-assessed the actual usage period of various fixed assets and decided to adjust the depreciation period for some fixed assets from July 1, 2017, and adjust the depreciation period for line assets from the original 8 years to 8 to 15 years. The equity transfer of CITIC Network has been further advanced. The value of the “Pentium One” network is yet to be reassessed. At the end of September 2017, the company issued an announcement that it intends to participate in 49% of CITIC Network's shares, with a reserve transfer price of 1,338 billion yuan. On October 13, 2017, Dr. Peng's 2017 Fourth Extraordinary General Meeting of Shareholders deliberated and passed the relevant proposals. The target enterprise, CITIC Network, has basic telecommunication business operation qualifications approved by the state. It is the only basic telecom business operator other than the three basic operators with legal qualifications for fixed network dedicated line circuit business, and can also use resources from Asia Satellite Co., Ltd. to carry out satellite transponder rental and sales business. Dr. Peng's participation in CITIC Network will be of great benefit to both parties: for Dr. Peng, it will benefit from various aspects of licenses, network resources, and profitability, which is conducive to the restoration of the company's valuation. As far as CITIC Network is concerned, the private broadband leader Dr. Peng is the main user of Pentium 1. He has rich experience in broadband operations. It is expected that the overall operating efficiency and profitability of Pentium 1 will improve in the future. At the same time, the two will establish a closer relationship. Dr. Peng can use the Pentium backbone network to provide a business support platform to ensure the advancement of the “global home operator” strategy; ensure the company's network transmission quality and transmission efficiency; ensure network security, smooth and stable network; save Internet network settlement costs and reduce dependence on operator backbone networks; improve user experience, enhance the company's competitive advantage, promote business development and profitability; and better meet the burgeoning IDC exchange of visits, hybrid cloud connectivity and other business needs, giving the company new growth impetus. In terms of licenses, CITIC Network has two telecom licenses, which will be more conducive to the development of Dr. Peng's related business and the expansion of the company's business scope. (The license numbers are: A2-20070004, A2, and B2-20070299, respectively), and the scope of business is defined as follows. In terms of network resources, CITIC Network has the fiber-optic backbone network “Pentium-1,” which covers the whole country, and is worth a lot. “Pentium 1” is the fourth largest backbone network in China. It has an optical fiber network with a length of about 32,000 kilometers. Currently, it has opened 30 nodes including Beijing, Shanghai, Guangzhou, and Shenzhen, covering more than 200 large and medium-sized cities across the country except Lhasa, with a transmission capacity of 3.2T. In the preliminary report, we sold the fixed network business at a premium to HGC, pointing out that the Pentium 1 backbone network is very valuable: compared to HGC's fixed network resources, regardless of the length, coverage, number of users, or transmission capacity, Pentium 1 is clearly superior in terms of length, coverage, number of users, and transmission capacity. In addition, CITIC Network has also invested in a number of other network resources. The companies invested by the company include Hunan CITIC Communications Co., Ltd., which has optical fiber pipeline resources covering all of Hunan Province, and Guangdong Yingtong Network Investment Co., Ltd., which has optical fiber pipeline resources covering the entire province of Guangdong. In terms of profit, CITIC Network achieved revenue of 383 million yuan and net profit of -104 million yuan in 2016; CITIC Network's operating cash flow gap was 44 million yuan in 2016. Preliminary estimates suggest that the annual capital gaps in 2017-2019 are about 66 million yuan, 63 million yuan, and 50 million yuan. As a private broadband leader, Dr. Peng has extensive experience in broadband operations. If Dr. Peng obtains shares in CITIC Network this transfer, it may have a positive impact on its sales, revenue, and net profit. In terms of asset valuation, on the one hand, in the preliminary report, we further verified that the value of Pentium One cannot be ignored by comparing HGC's premium sale of fixed network business. On the other hand, the market previously believed that the equity relationship between Dr. Peng and CITIC Network was highly uncertain, and gave the company a high discount on this part of its assets (or its utility was not included in Dr. Peng's valuation considerations). We believe that, based on the importance of Pentium-1 network resources, Dr. Peng's valuation is expected to be further repaired if the shares are transferred and implemented. We are optimistic about the company's leading private broadband value, maintain the “buy” rating company's early cooperation with China Unicom, and gather more resources for future corporate platforms. Currently, the company continues to promote the “cloud management end” strategy, steadily implements the “global home operator” strategy, and actively takes over the operation of the “Pentium 1” backbone network. We believe that Dr. Peng, as a private broadband operator with both value and growth, should enjoy a higher premium space than state-owned broadband operators. In the future, with the gradual increase in internet rates, performance will be steadily supported. We are optimistic about the expansion of the company's steady user growth base in OTT, online education, etc., and the fund-raising project is conducive to the long-term development of the company. The company's net profit for 2017-2019 is estimated to be 8.3/10.1/1.22 billion yuan, corresponding to a price-earnings ratio of 30/25/20 times. Considering the premium and epitaxial dynamics of private broadband leaders, the long-term logic remains unchanged and the “buy” rating will be maintained.