Key investment points: The company issued an announcement stating that its wholly-owned subsidiary “Hong Kong Qinshang” plans to acquire 100% of the shares of Eddy Education Group (hereinafter referred to as “Eddy Education”) in cash. The initial valuation of this acquisition is RMB 2.9 billion worth of US dollars. The exclusive promise of the acquisition required “goodwill money” of 140 million yuan in consideration. Subsequent companies do not rule out implementing the acquisition through arrangements such as setting up a fund enterprise or subscribing to fund shares. Ping An's view: Actively lay out the K12+3 education industry chain. The prototype of the entire education industry chain for 3-18 year olds is visible. Since Qinshang Optoelectronics announced the acquisition of Longwen Education in early 2016, it has rapidly promoted the acquisition of Little Red Hat Education, English Education and Eddy Education. The company plans to acquire more than 80% of Little Red Hat Education's shares, about 75 direct-run kindergartens and 33 managed kindergartens under Little Red Hat Education; British Education is a domestic full-time non-academic education international school, covering about 250 people in the K6-K12 school segment. Judging from the company's education asset acquisition process, it is actively centered around K12+3 education layout education, preschool education, and international education. The strategic positioning of the education industry chain is gradually becoming clear. Eddy Education provides a one-stop system of international education from kindergarten to grade 12, which is highly compatible with the company's K12+3 strategy. Eddy Education was established and continues to exist in accordance with Cayman Islands law. It entered China in 1997. Through the VIE arrangement, it controls several educational assets and operations in China, providing Chinese and foreign students with all-English and bilingual kindergarten, elementary school, Australian (WACE), American (ASE), A-LEVEL (A-LEVEL) international high school and international university preparation courses taught in both English and bilingual modes; at the same time, Eddy's is the official test site for the five major international examinations in Australia, the United Kingdom, Canada, New Zealand, and the ACT Waited over 5,000 universities. Up to now, Eddy has sent about 11,000 people to study abroad. Beijing Eddy International School, the most famous school under Eddy Education, covers four different types of international schools, from kindergarten to pre-university and English training, according to different curriculum systems. There are about 2,600 students enrolled. Investment advice: Continuously improve the education ecosystem and maintain a “recommended” rating. Since the company transformed education and positioned itself as the two main businesses of LED and education, the acquisition of Longwen Education successfully entered K12 education and training. Huaxia Life became the company's second shareholder to help lay out education assets. Little Red Hat Education, British Education, and Eddy Education quickly launched as acquisition cooperation intentions, used their first-mover advantage to run the horse and actively build a K12+3 education industry chain platform, which is expected to occupy a leading position in the industry. In view of the uncertainty of when the recent epitaxial layout was implemented, it is estimated to achieve operating income of 1,125 billion yuan, 1,684 million yuan and 1,834 million yuan in 2016-2018, with net profit of 113 million yuan, 200 million yuan and 246 million yuan respectively. The year-on-year increases were 443.4%, 77.2% and 23.2%, respectively, and EPS was 0.07 yuan, 0.13 yuan and 0.16 yuan, respectively, corresponding to the closing price on December 16. Dynamic PE was 126.8 times, 71.5 times, and respectively 58x. Risk warning: The LED industry is fiercely competitive and risky; competition in the K12 education and training industry is intensifying; Guangzhou Longwen is slow to add new outlets, the release of performance falls short of expectations, delays fall short of expectations, policy risks, etc.