Key investment events: Borui Communications announced plans to issue shares to purchase assets and related transactions. It plans to purchase 100% of Hyundai Communications's shares and 70% of Bus Media's shares from Chengdu Media Group by issuing shares. The initial price of 100% of Hyundai Communications's shares was 39.963 million yuan, and the initial price of 70% of Bus Media's shares was 420.68 million yuan, for a total of 82 billion yuan. At the end of 2017, the company divested traditional media printing and distribution assets and businesses, and now plans to acquire two high-quality marketing companies, and the reform is accelerating. Bus media is responsible for operating Chengdu bus advertising media resources, including bus shelter billboards, bus bodies, bus televisions, and in-bus billboards. In 2017, bus media achieved revenue of 90.49 million yuan and net profit of 37.76 million yuan (+44%). Hyundai Communications was founded on March 27, 2018, and has the right to operate bus advertising in Chengdu for 30 years (March 31, 2018 to March 30, 2048), granted free of charge by the Chengdu Municipal People's Government. Hyundai Communications entrusts the operation of the bus advertising rights it owns in Chengdu to the bus media, and charges it for the operation and management of media resources within the authorized operation period. The targets for the company's proposed mergers and acquisitions are extremely scarce, and the business has a very high moat. The company is extremely motivated to reform and dares to try to push for reform. The new chairman of the company has been very popular and has actively promoted reforms. Since taking office, the company has shown new changes in its public image, operating performance and management level. In terms of public image, the company implemented a rectification of the official website, and the company's directors actively communicated with investors on various occasions such as snowballs; in terms of performance, although the company's performance declined markedly in 2017, non-net profit withheld in 2018 Q1 increased 79% year-on-year, and there was a clear trend of performance bottoming out and rebounding. In terms of management level, in 2018, the company clarified new strategic goals, implemented horizontal specialized restructuring and vertical reduction of management levels to ensure organizational efficiency, and carried out strict monthly and quarterly examinations, with clear rewards and penalties. At the same time, as the only listed cultural media enterprise under the Chengdu Municipal State-owned Assets Administration Commission, the company has unique advantages in terms of policy and talent attraction. The commitment to performance in the context of mergers and acquisitions will directly enhance the company's performance. Bus Media promised to deduct non-return net profit of no less than 4302/5362/65.24 million yuan in 2018-2020; Hyundai Communications promised to deduct non-return net profit of not less than 729/1343/18.2 million yuan respectively in 2018-2020. Considering that the net profit of Borui Communications in 2017 was 34.8 million yuan, the merger of Bus Media (70%) and Hyundai Communications will greatly increase the company's performance. Profit forecasts and investment advice. Without considering bus media and modern communication, the EPS for 2018-2020 is expected to be 0.04/0.03/0.04 yuan, respectively, and the corresponding PE is 131/135/134 times. We believe that the core focus of Borui Communications is future asset integration and state-owned enterprise reform. We should pay attention to the company's future reform trends and not make investment rating suggestions for Borui Communications yet. Risk warning: The pace of reform promotion and approval time fell short of expectations, and the performance of mergers and acquisitions fell short of expectations.