The controlling shareholders increased their shares in the company, demonstrating their positive attitude. The company is the only state-owned listed company in Zhangjiajie. It has high-quality and scarce tourism resources such as Zhangjiajie China Travel Service, Baofeng Lake, Yangjiajie Ropeway, Environmental Passenger Transport, and Zhang International Hotel. Backed by the government, the company's future platform advantages are expected to be reflected. At the same time, the majority shareholders have successively increased their shareholding, demonstrating their determination to develop: 1) In 2017, Zhang Jingtou, the majority shareholder, increased the company's shares by 1.15%; 2) In 2018, the Zhangjiajie People's Government transferred the shares of Wulingyuan Company to Zhang Jingtou free of charge, making Zhang Jingtou directly or indirectly hold 35.30% (27.83% + 7.47%) of the shares in listed companies. Previously, local government control over the company was relatively scattered, and the majority shareholders' series of resource integration actions showed that in the future, the company is expected to further integrate resources as a platform, which will bring continuous positive improvements to the company. The divestment of loss-making operating assets in 2017, and the improvement in Q2 performance in 2018 was announced in September 2017. The four wholly-owned subsidiaries (100% tourist center, 100% rural tourism, 100% tea industry development, and 47.5% of Zhongchuang Technology) were transferred to Zhangjiajie Industrial Investment Company, the majority shareholder, through a price agreement of 56.98 million yuan, bringing one-time asset value of 29.27 million yuan to the company in 2017. In Q2 of this year, the company achieved net profit of 35.021 million yuan, an increase of 24.76% over the previous year. The gross margins of the sightseeing tram and Baofeng Lake Scenic Area businesses increased by 10.68 pct and 2.59 pct, respectively. At the same time, fee control increased net profit after non-deduction by 1.72%. The construction of Dayong Ancient City is about to be completed, which is expected to bring incremental revenue to the company. The Dayong Ancient City project is about to open. According to estimates, after maturing, the project will bring the company 485 million in incremental revenue and 185 million yuan in net profit contributions every year. Zhangjiajie Tourism will make up for the shortage in its leisure and vacation tourism sector, solve the pain points of lack of local leisure and entertainment, and transform from a traditional tourist attraction management unit into a comprehensive scenic area operator integrating leisure, vacation, and sightseeing. Traffic radiation is gradually expanding. The 2019 high-speed rail will help the development of scenic spots, and surrounding traffic will continue to improve: 1) aviation - Hehua Airport completed the airport expansion of 1,962 billion yuan in 2015, which can achieve an annual throughput of 5 million passengers, and aviation reception capacity has been strongly improved; 2) the high-speed railway - the Zhangsang Expressway opened to traffic at the end of 2017, covering many tourist attractions on the western route; 3) the high-speed rail - the Qianzhangchang high-speed railway is expected to be completed and operated in 2019. Connecting southwest Hebei and southeast Chongqing regions, Zhangjiajie to Changsha will be shortened to 2 hours, and at the same time become a scenic spot in the Chongqing region The most convenient channel. Taking a multi-pronged approach, traffic improvements will increase the radiation area of scenic spots and effectively increase passenger traffic in scenic spots. Investment advice: We believe that the company's internal and external conditions are expected to continue to improve in the future. The superposition company is the only platform for listed companies that the local government and the Zhangjiajie State Assets Administration Commission plan to expand and strengthen the scenic area. The company has a great advantage in long-term development. The EPS for 2018-2020 is expected to be 0.12, 0.16, and 0.20 yuan, respectively, and the stock price corresponding to PE is 55, 40, and 32 times, respectively, maintaining the “increased holdings” rating. Risk warning: passenger flow in the ancient city of Dayong falls short of expectations; uncertainty of weather factors; geopolitical risks.