The company's recent situation The company announced a plan for the non-public offering of shares. It plans to raise no more than 1,054 billion yuan (no more than 30% of the total share capital/175 million shares), of which 1 billion yuan will be used to repay interest liabilities and 54.0674 million yuan will be used to supplement working capital. Commenting on the controlling shareholder's intention to fully subscribe for shares shows confidence, and it is hoped that raising capital will significantly ease financial pressure. The proposed private capital raised this time is no more than 1,054 million yuan (175 million shares). Xinxing Hanyi, the controlling shareholder of the company, will subscribe for all shares in cash for a period of 36 months. Currently, the new star Hanyi and its co-actors hold a total of 31.27% of the shares, of which the rising star Hanyi holds 13.73% of the shares; after the completion of the non-public offering, the rising star Hanyi and its co-actors hold 47.13% of the shares (if the concerted action agreement is renewed in January 2021), of which the rising star Hanyi holds 33.64% of the shares. We believe that the controlling shareholder's full subscription of the issued shares shows their firm confidence in the long-term development of the company. Judging from the purpose of fund-raising, this fund-raising is mainly used to repay interest-bearing liabilities. As of 1H20, the company's interest-bearing liabilities (short-term debt+notes payable+long-term liabilities) reached 1,735 billion yuan, and the balance ratio reached 59.86%. The heavy debt burden has caused high financial expenses. 1H20 financial expenses reached 196 million yuan, accounting for 58.83% of revenue. We believe that in the future, when 1 billion yuan of private capital is put in place, it will significantly improve debt levels and optimize asset structure; at the same time, financial expenses will be reduced, and the company's performance will return to growth. The film, television and sports business is gradually picking up, and we are optimistic about a steady recovery in 2021. The company said that as the impact of the epidemic at home and abroad gradually receded, the company's film, television and sports business also picked up. In terms of film and television business, “Happiness to Ten Thousand Families”, produced by the company and directed by Zheng Xiaolong, was launched on September 19. The company is also actively promoting the clearance of film and television inventory to speed up the pace of repayment; at the same time, its cinemas resumed operations in July. In terms of sports business, the company holds the rights of a number of top global tournaments, including exclusive global commercial rights in the 2021-2028 AFC event (sponsorship and copyright), the 2018-2022 UEFA national team event (exclusive copyright of new media and global sponsor rights), and the full media rights of the 6 seasons of La Liga in 2019/2020-2024/2025. At present, the organizing committee for the 2023 AFC Asian Cup in China has been approved by the State Council. Gou Zhongwen, director of the General Administration of Sports, and Chen Jining, mayor of Beijing, serve as chairmen. We believe this shows the importance that relevant departments attach to the Asian Cup tournament; at the same time, the company has also completed sales of AFC interests in some overseas regions one after another. Looking ahead to 2021, we expect the company's film and television business to remain stable; driven by the European Cup revenue confirmation and the Asian Cup tournament, the sports business is expected to bottom out and pick up. The valuation suggests keeping the 2020 net profit forecast unchanged. Considering that the impact of the pandemic on the sports industry will take time to digest, or that it will have a certain impact on 2021 European Cup revenue, we lowered our 2021 net profit forecast by 28.9% to 311 million yuan. The current stock price corresponds to a price-earnings ratio of 13 times in 2021. Maintaining a neutral rating, the target price was lowered by 16.0% to the target price of 7.98 yuan, corresponding to the price-earnings ratio of 15 times in 2021, and there is room for growth of 16.2% compared to the current stock price. Risky non-public offerings are uncertain. The extent of the impact of the global pandemic has exceeded expectations, the performance of mergers and acquisitions has fallen short of expectations, the postponement of the European Cup or impairment of goodwill, tight cash flow, the risk of impairment of film and television inventories, and the progress of new film and television projects has been slower than expected.