Investment highlights: events. On April 16, 2017, the company announced its 2017 annual report. In 2017, the company achieved total operating income of about 1,137 billion yuan (YOY +8.27%), net profit of about 190 million yuan (YOY +4.21%), and net profit of about 161 million yuan (YOY -5.92%). The company's profit distribution plan for 2017 is based on 910 million shares. Cash dividends of 0.43 yuan (tax included) are distributed to all shareholders for every 10 shares, for a total cash dividend of 39.1453 million yuan. No bonus shares will be sent, and no capital reserve funds will be transferred to shares. The processing of short-term incentive expenses and the year-on-year decline in non-operating income slowed performance growth: in terms of three fees, the company's sales expenses in 2017 were 142 million yuan (YOY -13.79%). Management expenses were $304 million (YOY +27.23%), of which $50,1526 million was paid as a reward for performance on gambling. Financial expenses were -2.8 million yuan compared to -180,000 yuan in the same period last year, mainly due to increased interest income. In addition, the company's non-operating income in 2017 was 454,100 yuan (YOY -99.06%), of which government subsidies and immediate collection and refund of software value-added tax decreased by 9.0719 million yuan and 38.5026 million yuan, respectively, compared with the same period last year. Competition in the large-screen splicing industry is increasing steadily, revenue structure optimization, and DLP products maintain a leading position in market segments: Under the influence of macro factors and increased industry competition, the company's ultra-high resolution digital splicing wall system revenue is still growing steadily. In 2017, it achieved 658 million yuan (YOY +0.41%), accounting for 57.89% of total revenue, of which the visualization software business revenue grew by more than 20%, and the revenue structure was further optimized. Furthermore, in terms of DLP products, the company continues to innovate and maintain its leading position in this market segment, with a market share of over 30%. The preschool education sector is developing rapidly, acquiring rich preschool education brands with two major education targets, and partnering with Baidu to help upgrade the preschool education industry: the company's rapid growth in the preschool education sector in 2017 was a major contributor to the company's revenue growth. It achieved annual revenue of 479 million yuan (YOY +21.31%), accounting for 42.11% of total revenue, achieving gross profit of 277 million yuan, and stable gross margin. In 2017, the company spent 491 million yuan to acquire 70% of the shares of Kerr Education and Dingqi Preschool Education respectively, further expanding the scale of the company's preschool education business, enhancing the profitability and integration capabilities of the company's preschool education industry, and collaborating with Hongying and Golden Cradle to consolidate the offline layout of preschool education. At the revenue level, Hongying, Golden Cradle, and Kerr all exceeded their performance promises in 2017. At the business level, Hongying's launch of the “New Hongying” project is expected to further boost the company's performance growth. The Golden Cradle has been upgraded. We expect that in the future, kindergarten education standards and customer unit prices will increase simultaneously. In the future, Kerr is expected to help the company gain a foothold in high-end kindergartens, while Dingqi is an important initiative for the company to implement a leading regional strategy. In addition, the company completed non-public stock financing and raised 918 million yuan for the construction of children's arts and sports centers, further expanding the children's industry while laying the foundation for the company's future investment. The company joined hands with Baidu in September 2017 to jointly create smart preschool education industry solutions and help upgrade the preschool education industry. Profit forecasts and investment advice. The preschool education industry is in a stage of rapid development. Demand continues to be strong, and there is plenty of room for improvement in concentration and level of operation. At the same time, the industry urgently needs integrators, and is in urgent need of capital, management, and resource support. Judging from the market share, the company currently manages the largest number of kindergartens in the preschool education industry, and has a leading edge. We expect the company's net profit for 2018-2020 to be 289 million yuan, 382 million yuan, and 434 million yuan respectively, corresponding to the 2018-2020 EPS forecasts of 0.32 yuan, 0.42 yuan and 0.48 yuan. A comprehensive comparison of the average PE of comparable listed companies in transformation education in 2018 was 36.12 times, giving the company a valuation of 36 times in 2018, corresponding to the target price of 11.52 yuan. Maintain the buy rating. Risk warning. The risk of a shortage of preschool education personnel, the risk of acquisition and integration, the risk of increased market competition, and the risk of kindergarten safety.