Acquiring Juguang Huiying's shares and taking the first step in the second main business of film and television culture, Weihai Culture announced, a partnership enterprise controlled by the company, to increase capital and transfer some shareholders' shares to Beijing Juguang Huiying with its own capital and bank loans totaling 111 million yuan. After the transaction is completed, Weihai Culture will hold 41.11% of the company's shares. The evaluation by the evaluation agency confirmed that the assessed value of the total shareholders' equity of Juguang Film Company was 255 million yuan. The company's net profit in 2015 was 10.122 million yuan. The target company promised net profit attributable to all shareholders in 2016-2018 after deducting non-recurring profit and loss of 17 million yuan/23 million yuan/31 million yuan, respectively. According to the 2016 promised performance calculation, the purchase price corresponding to 2016 PE was only 15 times, far below the average market valuation. A leading film and television special effects company in China, with strong performance guarantees, Focus Film was founded in 2012 and is a leading film and television special effects production company in China. Focus Film has a good reputation in the film and television special effects industry at home and abroad, and has won many visual effects awards at film festivals. Juguang Film has maintained long-term close cooperation with many famous directors, producers, and production companies at home and abroad, and has completed more than 30 domestic and foreign theater films so far. At the end of each fiscal year for the next three-year performance commitment period, if the target company's accumulated net profit within that fiscal year fails to meet the promise, the counterparty is required to pay cash compensation to the company three months after the annual audit report is issued. After the commitment period ends, if the target company exceeds its performance commitment, the target company shall reward 40% of the excess net profit to the person responsible for the performance commitment. The second main business, the industrial chain, is beginning to take shape. According to the company's plan, the second main business is divided into four parts: film and television operations, animation and game operations, cultural finance services, and key links in industrialization. We have determined that the operation of animation games will be handled by Lezuo Network, and the acquisition of Spotlight Film is expected to be a key part of industrialization. In the future, we believe that the company will not rule out continuing its layout in other segments and finally complete the complete layout of the secondary sector. The company does not directly participate in the investment of film, television and game products, but instead obtains stable income and profits through specialized services, greatly reducing business risks. The company's advantage lies in differentiated competition and rapid development of the blue ocean market. The inflection point in the main business performance is approaching. It is expected that PPP has announced that it has signed a new order of 7.466 billion yuan in 2016 (the Fujian Health Industrial Park won the joint bid), with a year-on-year growth rate close to 80%. Among them, a single PPP project is large, and revenue has not yet been confirmed on a large scale. We judge that with the implementation of new orders next year, the revenue growth rate of the main business will accelerate. Furthermore, the BT projects have all been completed and are entering the repurchase period one after another. Cash flow will improve, making sufficient reserves for capital for PPP projects. In addition, the company's fixed increase of 2.47 billion yuan will be used to invest in signed projects to protect performance at the capital level. It has a high margin of safety, and both performance valuations have improved, and actual controllers and executives of companies with “increased holdings” ratings have increased their equity holdings by 8.33% in January of this year through asset management plans, at a cost of 522 million yuan at an average price of 8.61 million yuan. Currently, there is a large margin of safety in stock prices. With the inflection point in performance and the gradual implementation of the second main business, the company's performance and valuation in 2017 will both improve. We expect the 2016-18 EPS to be 0.13/0.34/0.48 yuan, and the three-year CAGR +77%. Approval gave the company a reasonable valuation range of 11.3-12.6 yuan to maintain the “increased holdings” rating. Risk warning: The signing of PPP projects fell short of expectations, and cash flow continued to deteriorate.