1. Incidents Oriental Pearl released its 2019 annual report: in 2019, the company achieved operating income of 12.345 billion yuan, a year-on-year decrease of 9.46%; net profit attributable to shareholders of listed companies was 2,043 billion yuan, up 1.37% year on year. 2. Our analysis and judgment company has a leading multi-channel media network integration platform in China, and has a broad user base in IPTV, Internet TV, cable TV, mobile video and other businesses. Its subsidiaries are in a leading position in the video shopping industry, and are also actively exploring new models of “e-commerce” and “e-commerce” internet-based shopping. (1) The IPTV business is the highlight of the performance, and the number of users continues to grow. The company is building the BaestV integrated media platform to promote the development of multiple channels such as IPTV, Internet TV, cable TV, and mobile video. The number of BestV IPTV users grew from 20 million in 2013 to 57.86 million in 2019, and the number of monthly active Bestv mobile users reached 81 million. The company has now become the largest integrated operation platform for cable digital high-definition pay channels in the country, and the number of users continues to grow. High-definition and standard-definition channel pay-TV subscribers cover 200 million digital TV subscribers in 31 provinces, municipalities and autonomous regions across the country, with a total of 18 self-owned and integrated high-definition pay channels. High-definition channels have been launched in 29 provinces, municipalities, and autonomous regions across the country. The number of active pay-TV users has reached 60 million, the number of interactive on-demand cooperation platforms has reached 40, and the number of users has reached 17 million. (2) The 5G+8K industry layout is accelerating, and media network business companies currently have a 3,000-hour 4K content reserve. The bestV integrated media platform 4K zone has been launched in many provinces, and has a certain leading edge in the 4K field. In September, the company launched the country's first 8K video laboratory featuring 8K content screening and 8K immersive experiences; at the end of 2019, the company created AI interactive educational content and completed many 5G+4K and 5G+VR live streaming experiments. In the future, 5G will also continue to help the development of 4K/8K ultra-high definition. The company and industry-leading partners such as China Telecom and Foxconn have jointly showcased 8K video transmission applications based on 5G networks and established the “5G+8K” industry alliance. By integrating their respective superior resources, they will work together to create a new pattern of joint development in the 5G/8K business field. (3) Live e-commerce has ushered in development, and the video shopping business is expected to grow rapidly. Today, online consumption has become the shopping method chosen by more and more consumers, and residents' online spending habits have gradually developed. Affected by the epidemic, the consumption model has changed from offline to online, and e-commerce live streaming has ushered in new opportunities for development. Both the supply and demand sides of consumption are eager for the help of live e-commerce, and the scale of the industry is expected to remain high in the future. Oriental Shopping, a subsidiary of the company, is a video shopping platform with the largest sales volume in the country. It is actively using live streaming channels to promote business development. It has been awarded “2019 Outstanding Media Company” by Taobao Live, and the “Giant Plan” for video shopping launched by the company to solve the current difficulties of TV shopping in terms of “user service, business environment, risk control, and operational efficiency” has made gradual progress. In the “Crazy 618” campaign created by Oriental Shopping in June 2019, the total order volume exceeded 157 million yuan, and the order volume increased by 40.6% year on year. Among them, the “Crazy 618, Night Carnival” webcast program, co-created with Yongda Auto and Taobao Live, had over 3 million viewers and a total order value of over 58 million yuan; the “Oriental Shopping x JD” Shuangliren Super Brand Day live event created with JD and Shuangliren exceeded 10 million yuan, with subscriptions exceeding 10 million yuan, and visitors increased 300% over the previous month. The live streaming model creates opportunities for video shopping business growth. (4) Giving full play to the advantages of the platform to help the smooth operation of online education has been affected by the epidemic. China's educational activities have been impacted as never before. Teaching communication has moved from offline to online, and online education has been widely promoted. During the epidemic, the company provided a full range of safety guarantees for millions of students in terms of channel establishment, safe broadcasting, technical support, orchestration, and operation services. Its subsidiary PepsiCo offered 12 channels of live streaming courses from the first grade of elementary school to the third year of high school. Through platforms such as Oriental Cable, PepsiCo IPTV, and BestV App, on the first day of launch, the number of students watching the live broadcast of the course reached 1,433 million, accounting for 93.6% of the total number of primary and secondary school students in Shanghai. In the future, the company will continue to make full use of its advantages such as large screens, content, and user base to continue to promote the development of the online education business. 3. Investment recommendations The rapid implementation of 5G+ Ultra HD enables the company's strategic layout for new media business and e-commerce live streaming business. We are optimistic about the company's growth opportunities in the 5G era. The company's net profit attributable to shareholders of listed companies in 2020 and 21 is estimated to be 2.127 billion yuan/2,653 billion yuan, up 4.11%/24.72% year on year. The corresponding EPS is 0.62/0.78, and the corresponding PE is 14x/11x, respectively, giving recommended ratings. 4. Risks indicate the risk of increased competition in the market, the risk of changes in regulatory policies, the risk of intellectual property infringement, the risk of the impact of the epidemic situation, public health risks, etc.