Investment highlights:

The reform continues to deepen and the core business grows steadily.

Attach importance to capital operation and expand industrial chain

Transform the traditional cultural business and increase the experiential business model

Stable asset structure and excellent financial data

Financial forecasts and ratings:

We believe that the growth of traditional business will remain stable in the future, and the new performance growth point in the future will mainly come from the company's new business and newly acquired subsidiaries. The company's experiential business model will raise the gross margin of the company's issuance business to more than 20 per cent, the new subsidiaries will increase net profits, and the overall growth rate is expected to remain around 8 per cent in 2017-2018.

After deducting the impact of non-recurring profit and loss, we expect the company's operating income from 2017 to 2018 to be 1.694 billion yuan and 1.83 billion yuan respectively, and earnings per share to 0.21 yuan and 0.23 yuan respectively. In view of the steady growth of the company's main business and the development potential of new businesses such as education and entertainment business, we give the company a price-to-earnings ratio of 45 times, forecast a stock price target of 9.90 yuan in the next six months, and give a "recommended" rating.

Risk Tips:

The gross profit margin of the main business continues to decline

The change of external environment affects the business of textbook publication and bill printing