Key investment events: City Media announced that the company plans to invest no more than 40 million US dollars to participate in Shenzhen Qianhai Xingwang Investment Management Co., Ltd. to initiate the establishment of a US dollar fund to invest in leading companies in the mobile internet audio industry. It is expected to indirectly account for about 1% of the company's shares. Invest in the business and expand the layout in the Internet field. The company has previously invested in various fields, including Himalaya, the unicorn in the Internet audio sector (participating in Series C financing in June 2016, accounting for 1.45%), Yueduji, the first brand for women to read (51% of the shares invested in November 2015, completed the acquisition of the remaining shares at the end of 2017), and Children's Stone Network in the animation and entertainment sector. The target companies participating in this investment are estimated to have an overall valuation of 4 billion US dollars, which is conducive to the layout and expansion of urban media in the Internet field. The main business grew steadily, and the quality of operations continued to improve. The company achieved rapid profit growth compared to the industry as a whole. The net profit growth rates for Q1 in 2017 and 2018 were 21.05% and 22.55%, respectively. At the same time, operating indicators continued to improve. The company's gross margins for 2015-2017 were 37.32%, 37.93%, and 38.78%, respectively, and net interest rates were 15.47%, 15.74%, and 16.88% respectively, showing an upward trend year by year. Books generally account for a high proportion, leading the country in some categories, fully benefiting from the recovery of the industry. The company's general book business accounted for more than 75% of total revenue in 2017, fully benefiting from the recovery of the industry, and educational and children's books became the company's main contribution categories. The company leads the country in fashion and lifestyle books. Among them, food books have been ranked first in the country for 9 consecutive years; thanks to the “Qingdao Publishing Cup” Go Open Tournament and training activities, etc., the market share of chess and card books has steadily ranked 1st in the country; and women's fashion books have risen to 2nd place in the country. The children's book market share and readers' recognition are also increasing year by year. Acquire the remaining shares of “Happy Reading Ji” to further advance IP development and operation. The company completed the acquisition of the remaining 49% of Yueduji's shares in Q4 2017, making it a wholly-owned subsidiary of the company. “Happy Reading Chronicles” is the first domestic professional publishing brand for women, and has created many best-selling books, including “How to Sheng Xiao Mo,” “Step by Step,” and “To Youth,” and “To Youth.” The popular novels “If You Don't Meet Jiang Shaoling”, “The Lighter and the Princess Dress”, and “I Heard You Like Me” are about to launch a film and television project, which is expected to drive a new sales boom. Strategic cooperation with JD accelerates the launch of themed bookstores. The company created a themed bookstore operation model that organically combines book sales with cultural elements such as dining experience, lifestyle and leisure, art appreciation, and online interaction. A strategic cooperation framework agreement was signed with JD on September 7. More than 10 “complex cultural living spaces” have been built across the country, and it is expected that no less than 50 will be built together by the end of 2018. Accelerate asset-light model replication and output. Actively promote the film and television business, and promote content production and IP incubation. At present, it has participated in 9 investment film and television projects. The film documentary “The Base” won the first prize of the China Guangzhou Association China Documentary Award and the first prize of the Taishan Literature and Art Award; the participating TV drama “My Dad is Strange” was selected for the 2016 Beijing Cultural Quality Project Key Project, and the TV drama “You Were Too Late” will soon be broadcast. Promote the extension of copyright assets and explore new business formats integrating multiple elements. The company invested 1 billion yuan to build the province's first fashion culture experience platform, Qingdao City Media Plaza, which began trial operation on December 16, 2017. The City Media Plaza is positioned as a “fashionable cultural experience platform”. It integrates elements such as copyright, fashion, art, and technology. The business format is locked in the fields of reading experience, art experience, and lifestyle experience, highlighting new cultural spaces and upgraded exploration. It is an important step for the Qingdao Publishing Group to implement the “culturally strong city” strategy of the municipal committee and municipal government. Profit forecast and investment suggestions: We predict that Urban Media will achieve revenue of 2.51 billion yuan, 2,555 billion yuan, and 2,892 billion yuan respectively in 2018-2020, up 14.3%, 13.5%, and 13.2% year-on-year; net profit to mother of 383 million yuan, 443 million yuan, and 498 million yuan, with year-on-year increases of 16.22%, 15.66%, and 12.39%; corresponding EPS is 0.55 yuan, 0.63 yuan, and 0.71 yuan, respectively. Maintain a buy rating. Risk warning: The publishing industry is sluggish; performance falls short of expectations; transformation and upgrading fall short of expectations; systemic risk.