Matters: The company announced that it intends to purchase 27.20% of its shares in Zhongjing Cloud from Kehua Hengsheng, Jingkai Investment, and Hanfu Capital, and that it intends to issue shares to Sun Maojin to purchase 80% of its shares in Rongmei Technology (holding 63.47% of China Jingyun's shares). The total transaction value is 1,263 billion yuan, and the issue price is 4.54 yuan/share. After this transaction, the company directly or indirectly held a total of 90.67% of China Jingyun's shares. Sun Maojin promised that the deducted non-net profit achieved by China Economic Cloud in 2017-2019 will not be less than 82.78 million yuan/228 million yuan/233 million yuan. At the same time, the total amount of supporting capital raised is not more than 760 million yuan, with an issue price of 5.02 yuan/share. The subscription targets are Guangtian Riyue (controlling shareholder), Anyuan Investment (Guangtian Riyue Vice President Fan Yaogen is a partner), Sihua Infrastructure (controlled by Sun Maojin), Wang Yiding (Vice Chairman of Guangtian Riyue), and employee stock ownership plans, respectively, for 190 million yuan, 40 million yuan, 100 million yuan, and 4.1 million yuan. The funds raised are intended to be used for the China-Jingyun Opto-Magnetic Hybrid Architecture Cloud Storage Center project. The holding company, Jingyun, achieved a win-win situation, creating a dual business pattern of construction and IDC. According to IDC circle data, in 2016-2018, the IDC market size will reach 716/996/139 billion yuan respectively, with an average annual growth rate of 38.92% for three years. China Economic Cloud has a shareholder background in the National Information Center. It has a strong advantage in obtaining additional IDC cabinet license resources from first-tier cities and high-quality customers such as the military and financial institutions, and has mastered many advanced technologies such as big data freezing, secure networks, and secure storage. After the transaction is completed, it will use the strong construction capabilities and financing platforms of listed companies to break through the original capital constraints and achieve leapfrog development. Ningbo Construction Engineering will achieve absolute control over China Economic Cloud, create a dual industry pattern of IDC and construction, and open up new profit growth points. At the same time, it will acquire a full set of EPC capabilities and experience, including design, procurement, construction, and trial operation of data center construction projects. It is hoped that, using China Economic Cloud Beijing IDC as a model, it will continue to deepen the data center EPC market and share the dividends of the rapid growth of the IDC market. China Economic Cloud and China Science and Technology Guodun explore the huge potential for commercialization of quantum communication. China Economic Cloud announced the establishment of a joint venture between China Economic Cloud and China Science Guodun. China Economic Cloud holds 60% of the shares and plans to engage in the construction and operation of ultra-high security level data centers and quantum-encrypted communication networks. China Science and Technology Guoshield has world-leading quantum communication-related technology. Connecting with the resources of the China Economic Cloud National Information Center will be more conducive to the commercialization of quantum communication. In the future, China Economic Cloud will use the technological advantages of China Science Shield, which is expected to increase the premium of IDC products and services, obtain quantum communication channel fees, etc., which has great potential. The incentive mechanism for senior management has been further improved, and the interests of both parties are fully bound. Previously, the company's current executives had a low shareholding ratio, and they all held shares indirectly. After the transaction is completed, the shareholding ratio of current core executives will rise sharply, and the incentive mechanism will be further improved. At the same time, Dr. Sun Maojin, a core expert of China Economic Cloud, will hold about 14% of the company's shares after issuance, and other technical backbone will also hold shares in listed companies, fully binding interests, which will help management teams from both sides make concerted efforts to promote the rapid development of China Economic Cloud. PPP has driven a significant increase in company orders, and subsequent performance is expected to accelerate. The total amount of new orders signed by the company in January-September was approximately RMB 9.824 billion, an increase of 57.20% over the previous year. Recently, it was announced that two PPP projects won bids, with a total amount of 3.68 billion yuan. The results for the first three quarters fell 8.5% year on year, mainly due to fewer new orders signed last year. With the signing of new orders and the gradual commencement of PPP projects this year, subsequent performance is expected to accelerate. Investment suggestions: It is predicted that the company will achieve net profit of 2/316/476 million yuan in 2016-2018, corresponding to EPS of 0.21/0.22/0.34 yuan (after additional dilution), and the current stock price corresponding to PE is 31/28/18 times. The original construction business was given a market value of 6 billion yuan (corresponding to 25 times PE in 2017); referring to comparable companies, China Economic Cloud was given a valuation of 6 billion yuan, with a total target market value of 12 billion yuan, and a target price of 8.6 yuan. Risk warning: risk of restructuring transaction failure, risk of China Economic Cloud's performance falling short of expectations, risk of large macroeconomic fluctuations, risk of mergers and acquisitions integration.