Incident: The company announced that it signed a “Digital Art College Cooperation Agreement” with Guangxi College of Information Technology (planned) to jointly establish the Digital Art School of Guangxi College of Information Technology to jointly cultivate digital art design talents. Comment: Relying on our own strengths (Mars), we cooperated to run schools and set up a digital art college. Guangxi College of Information Technology is the first full-time general higher vocational and technical college featuring information technology. It is currently under construction. It has obtained approval from the People's Government of the Autonomous Region for construction, and has commissioned Guangxi Radio and Television University to build and manage it. Relying on its own advantages in the field of CG visual effects, the company cooperated with vocational colleges to establish a digital art college. The two parties provided 10 million yuan of working capital for the daily operation of the digital art school, of which the company contributed 55%. The School of Digital Art plans to establish majors in digital media art design, interior art design, game design, film and television multimedia technology, film and television animation. The target enrollment target is 3,000 students. After graduation, students will obtain academic certificates issued by the state. According to A-share company vocational education data, if a vocational college has an average annual tuition fee of 20,000 yuan/person, plus government subsidies (estimated at 1-2 million yuan/person/year), the total revenue is about 3-4 million yuan/person. At the same time, according to the average profit margin level of Hong Kong stock higher education targets (assuming 50%), if the School of Digital Art operates maturely, it will contribute about 30 million yuan (55% equity ratio) to the company. Explore new models of school-enterprise cooperation to run schools and create new profit growth points. As the scale of the digital art market continues to grow steadily and the demand for digital art design talents continues to rise, the company's wholly-owned subsidiary Mars Era is the leading digital art education leader in China, focuses on digital art design education, and has a good reputation in the industry. The company will use the existing curriculum system and teaching staff in the Martian era to jointly explore new models of school-enterprise cooperation in running schools with partners, which will help give full play to the resource advantages of enterprises and schools, expand the company's popularity and brand influence, and increase new revenue items and profit points. Investment suggestion: The company's current cooperation with vocational colleges is expected to be the first step for the company to enter the field of vocational education. It is expected that in the future, the company will further explore the cooperative model through replication; since 2017, the company has continued to implement a layout around art education in terms of vocational training, study abroad, industrial capacity, and academic education. According to our understanding of the art education industry chain, it is expected that the company will continue to expand in the future to achieve coverage of all age groups and further enhance the company's comprehensive competitive strength in the field of art education. The company's net profit for 2018 is estimated at 220 million yuan. Considering the company's endogenous ability to continue growing and the potential for business expansion (the School of Digital Art is expected to continue to contribute profits from 2019), we have adopted a segmented valuation method with a target price of 15 yuan to maintain a “buy-A” rating. Risk warning: policy risk, risk that the progress of cooperative schools falls short of expectations, risk that the number of students enrolled falls short of expectations.