The 2017 annual report and 2018 quarterly report exceeded expectations. The company's 2017 revenue of 1.97 billion yuan increased by 11.03%, and net profit to mother of 329 million yuan increased by 21.05%, slightly exceeding our expectations (about 3%). In the first quarter of 2018, revenue of 489 million yuan increased 7.12%, and net profit to mother of 80 million yuan increased by 22.55%, showing impressive performance. At the same time, the company plans to pay a cash dividend of 1.5 yuan (tax included) for every 10 shares, with a dividend rate of 31.9%. The main publishing business is strong. The education, children, and lifestyle modules jointly promoted the growth of the main business. In 2017, the company's publishing business achieved revenue of about 840 million yuan, an increase of 13.62% over the same period, and gross margin increased by 1.26 pcts to 46.54%, and the development momentum is good. The textbook teaching aid publishing business continued to make breakthroughs, achieving revenue of 398 million yuan, an increase of 13.63%, and gross margin increased by 2.9 pct to 58.15%. The company implemented and implemented various textbook projects such as “Science” and “Outstanding Traditional Chinese Culture” in 2017, and the education module will continue to grow. General book revenue was 276 million yuan, up 14.67% from the same period, and gross margin increased by 2.3 pct to 44.08%, mainly contributing to children, lifestyle, and “Happy Reading”. The revenue growth of the distribution business remained stable, but gross margin declined. In 2017, the distribution business achieved revenue of about 1,615 billion yuan, an increase of 9.83%. The gross margin decreased by 1.2 pct to 20.41%, and operating profit increased slightly by 3.57%. Mainly due to: 1) the revenue of the textbook distribution business fell 4.25%; 2) the gross margin of the general book distribution business fell 1.76pct. A number of textbook projects launched by the company in 2017 are expected to drive the textbook teaching aid distribution business to regain its growth momentum in 2018. We expect the revenue and operating profit growth rate of the distribution business to remain around 10% in 2018-2020. The main publishing business performed well in the first quarter of 2018, contributing a large percentage of growth. According to the business data for the first quarter of 2018 disclosed by the company, the publishing business revenue increased by 23.64% to 223 million yuan, slightly higher than the same period last year (20.10%), increasing operating profit by about 0.2 billion yuan; the revenue of the distribution business was 407 million yuan, up 5.39%, lower than the same period last year (15.5%), and operating profit was basically the same as the same period last year. The new business is being actively promoted, and it is expected that the company's “BC MIX” will actively expand in an asset-light manner. Among them, the company plans to cooperate with JD to build “complex cultural living spaces”. More than 10 will be built in 2017, and no less than 50 will be built by the end of 2018. At the same time, the company cooperated with local enterprises in Weifang and Dezhou to copy and output the “urban publishing” model. The company is actively promoting its film and television business, and has participated in nine film and television projects. Among them, the company participated in the TV drama “Many Years Too Late”, which is expected to be broadcast in 2018 (an urban emotional drama based on Yan Geling's novel “Supplementing Yu Mountain Residence” and starring Huang Xiaoming, Yin Tao, and Qin Hailu). Urban Media Plaza, which continued to maintain its “holdings increase rating” and opened at the end of 2017, is still in the cultivation period. It is not contributing to profits in 2018 and increasing depreciation pressure. Affected by this, it is estimated that the company's net profit growth rate in 2018 will fall back to 8.3%, but the net profit growth rate in 2019-2020 will return to more than 20%. Currently, the valuation level of companies in the publishing industry is 14-35X, and the average valuation level is 19X. Since the company's growth rate is higher than the industry average and is affected by amortization and depreciation in the short term, we believe that the company's reasonable valuation in 2018 was 18-20X, and the corresponding target price was 9.18-10.20 yuan, maintaining the “increase in holdings rating.” Risk warning: Paper prices fluctuate greatly, increasing operating costs; “You Were Too Late” was postponed.