Key investment points: Accelerate transformation and upgrading, and promote the integrated development of emerging and traditional media. The company released its 2017 annual report, achieving operating income of 1,969 million yuan, an increase of 11.03% over the previous year; net profit attributable to the parent company was 329 million yuan, an increase of 21.05% over the previous year. While highlighting its main publishing and distribution business, the company actively accelerates transformation and upgrading to new media and new business formats. We judge that the company's future industrial layout will be further innovated to become a publishing and media enterprise with diversified industries and complete business formats. Accelerate the accumulation of high-quality copyrights and expand the potential of the city's characteristic copyright system. The company produced a total of 7071 books during the year and received the National Publishing Fund for 10 consecutive years. The arts and culture sector launched a number of boutiques, and the cultural “going global” landscape continued to expand. The company successfully signed the full copyright of Junichi Watanabe to enhance its influence in the field of Japanese literature publishing. The education sector has implemented various projects such as “Science” and continues to advance the “One Million Districts, Counties, Ten Million Cities” strategy. Many works in the children's section have won awards such as the Chinese Book Award and the Bing Xin Children's Literature Award, and the brand effect is gradually becoming prominent. The “Smart Chef” series of books in the fashion and lifestyle sector has become the number one best-selling food book brand in China, and its exquisite publication is showing results day by day. The company's popular novels “The Lighter and the Princess Dress” are about to launch film and television projects, which are expected to drive a new sales boom. The company's distribution section comprehensively distributed documents of the 19th National Congress of the Party and political theory books, further clarifying the functions of the three major business segments of retail, internet, and library distribution. With the rapid accumulation of the company's copyright assets, the city's characteristic copyright system will continue to expand in the future, and the upgrading of distribution channels will also drive continuous improvement in operating standards. Diversify the all-media industry chain and establish an urban cultural consumption service system. The company promoted the development of related projects in accordance with the development ideas of “content +” and “product +”. The company launched the first “VR Ocean Classroom”, entered the audio content startup market to sign anchors and created multiple programs, and replicated Yungang Grottoes No. 3 1:1 The company's participation in the investment documentary “The Base” won several awards. The company initially established an “urban cultural consumption service system”. Qingdao Urban Media Plaza, which is positioned as a “fashionable cultural experience platform” as the core, has already opened, themed bookstore groups with different themes have gradually formed, and joined forces with JD to create more than 10 “complex cultural consumption spaces”. The company has also achieved cross-regional and cross-industry development through joint ventures and acquisitions. In the future, the company will integrate resources to achieve continuous innovation in business models and business models. Profit forecast: We expect the company's 2018-2020 EPS to be 0.55 yuan, 0.66 yuan, and 0.79 yuan. Also, referring to the expected PE of companies in the same industry, Zhongnan Media, Xinhua Wenxuan, and New Classic in 2018 were 13 times, 18 times, and 37 times, respectively. We gave the company 20 times PE in 2018, and the target price was 11.00 yuan, maintaining the purchase rating. Risk warning: The main downside risk of traditional publishing, and the risk of new business development falling short of expectations.