Key investment points: City-specific publishing and media companies with regional competitive advantages and local affinity, highlight their main business while actively accelerating transformation and upgrading to new media and new business formats. In the upstream content section, the company focuses on the publication of quality books and promotes the accumulation of high-quality copyright resources. Education, children's, social science books, and children's publications have all established good brand influence; in the downstream terminal section, the company indirectly holds Himalaya shares, and offline companies set up personalized service terminals in urban community life circles to conduct market-based operations in conjunction with their own copyrights for specialty books to create BC MIX food bookstores, and implement an asset-light chain brand management and output model that integrates reading, food, and social networking. The total retail volume of books in 2017 was 80.3 billion yuan, up 14.55% year on year. Offline book sales amounted to 34.42 billion yuan, up 2.4% year on year. Compared with the growth rate of -2.3% in 2016, positive growth has been achieved. The role of children's books in physical bookstores has been strengthened. In 2017, children's books accounted for 26.4% of physical bookstores with sales of 25% or more, an increase of 3 percentage points over 23.37% in 2016. The opening in 2017 shows that children's books account for 24.64% of the retail book market. It is the largest segment. The rapid growth of the children's market has also made this category a major contributor to market growth. The growth rate of bookstores in China's second-tier cities resumed positive growth in 2017, reaching 4.61%. According to statistics from the China Distribution Association, as of 2017, the total number of bookstores in China's first-tier cities of Beijing, Shanghai, Guangzhou, and Shenzhen was 14,400, and the total number of bookstores in second-tier cities such as Hangzhou, Nanjing, Chongqing, and Chengdu was 23,400. The resumption of positive growth in bookstores in second-tier cities is expected to drive new book markets. Profit forecast and investment rating: Maintain an increase in holdings rating. As offline physical bookstores such as Sisyphus Bookstore, Yanjiyou Bookstore, Eslite Bookstore, and City Media's BC MIX continue to expand, the competitive pattern of bookstores is expected to begin to be determined in the next 3 years. In other words, the current offline bookstore layout can be compared to the movie line construction 10 years ago. In the next 3 years, urban bookstores are expected to become an important cultural consumption scene in the city. Offline and online reading are inseparable symbiotic relationships, and offline books spawn an experiential economy in the upgrading of spiritual consumption. Urban media, which has a state-owned background, took the lead in exploring the asset-light operation model of BC MIX food bookstores offline, and is expected to replicate the characteristic offline bookstore output model in 2017-2019. We expect the company to achieve net profit of 3.27/3.62/403 million yuan, corresponding EPS of 0.47/0.52/0.57 yuan, respectively, and corresponding PE 20.2/18.3/16.4 times, respectively. Given the boom in general books and the high replicability of company-themed bookstores, it maintains an increase rating. Risk warning: Market competition increases risk; risk of competition from new media; risk of management risk due to rapid business expansion; risk of slowing industry growth; risk of industry competition; risk of paper price increases; risk of strategic cooperation with JD falling short of expectations; risk of declining performance; risk of insufficient human resources; risk of macroeconomic fluctuations.