Company announcement: Zhujiang Piano Culture Park Operation and Management Co., Ltd., a wholly owned subsidiary of the company, signed the "Guangzhou Cultural Industry Innovation and Entrepreneurship Incubator Project Strategic Cooperation Framework Agreement" with Nandu Guangyuan Entertainment and Southern Sports. The partners will make use of their own resources to jointly promote the Guangzhou Cultural Industry Innovation and Entrepreneurship Incubator project.

Partner introduction: 1) Nandu Guangyuan Entertainment is one of the six transformational benchmarking projects of Southern newspaper Group, deeply ploughing the film and television, music, art and cultural pan-entertainment industries. At present, it has successfully built a number of film and television, e-sports, entertainment-related industrial parks, and is the strategic partner of Tencent, Wanda, BABA, Zhejiang Satellite TV and other leading enterprises, and enjoys high popularity in the industry. 2) Southern Sports is a sports industry investment and operation platform funded by Southern Media Group. Relying on Southern Media Group's strong media resources and government communication channels, Southern Sports actively introduces and builds high-quality IP events and professional investment promotion and operation services.

After the cooperation of the three parties, we will jointly give full play to the advantages of resources to create a diversified cultural and creative industrial park that integrates music, sports and education. Nandu Guangyuan Entertainment is expected to help the Pearl River Piano Cultural Park project to introduce high-quality cultural and creative enterprises, and to initiate, plan and land all kinds of large-scale cultural performances and events; Southern Sports plans to turn the top open space of the Cultural Park into a domestic "aerial sports garden" and operate other indoor and outdoor sports activities on the river surface. It will also help the cultural park introduce all kinds of sports brand enterprises and hold sports events. Pearl River Piano will be responsible for providing sports venues and facilities, and priority will be given to meeting the rental needs of partners. The signing of this strategic agreement symbolizes that all parties will complement each other, share resources, and carry out comprehensive and in-depth cooperation around building a high-end cultural and creative park.

With the help of their own brand precipitation and resource advantages, continue to join hands to integrate multi-social resources, and continue to develop in the direction of artistic and cultural creation. The company has previously reached a strategic partnership with Harmony Education and Poly property to carry out and promote music education services and Pearl River musical instrument products in major educational institutions and communities across the country. The cooperation between the company and Holle Education will mainly run, operate and develop related art courses in kindergartens and youth palaces, and Poly property will jointly set up art education community stores. Poly property will provide the venue of the community store and related supporting facilities to support and sell Pearl River piano products, while the company will provide teaching instruments and courses for community shops. After this cooperation, the main business of the company's musical instrument sales will be improved, and the ready-made property channels will be transformed into publicity and sales channels, as well as the quality of the communities under Poly Properties. In addition, the two sides are also expected to jointly hold various art competitions, concerts and other artistic and cultural activities to enhance the popularity and influence of both sides, as well as the musical and cultural literacy of our citizens.

The art education sector continues to invest, promote the brand system to stay in the country, and achieve an integrated ecosystem. Through industrial operation and capital operation, the company accelerates the development of art education industry and promotes the construction of outlets. Beijing Art House, Fuzhou flagship stores, Jinan central stores and direct stores in Guangzhou and Foshan have been opened for operation. create a window for group services and cultural and artistic activities, and achieve an integrated ecosystem of musical instruments, education, online and offline multi-channels and Internet platforms. The company holds national music competitions for young people, colleges and universities and the elderly, respectively corresponding to different age groups of customers to establish a differentiated and hierarchical personality consumption matrix. Pearl River Eno intelligent musical instruments and digital art education course products are also constantly upgraded (such as the new version fall in love with keyboard, fall in love with ukulele courses, etc.), hardware services continue to be optimized, training services are more perfect. In the first half of 2018, there were more than 200 piano art classrooms in Pearl River, covering 626 partners.

Optimize the main business structure, acquire Schimmel to improve the brand matrix. From the industry point of view, the annual output of global traditional pianos is basically stable at about 500,000 units, the demand for medium-and high-grade pianos is showing a growing trend, and the industry is showing an obvious tendency of product upgrading. 1) create a differentiated product system: the company creates a brand system with strong international competitiveness in high, medium and popular grades, comprehensively promotes the Schimmel project and domestic marketing network, and continuously optimizes the product structure. at present, it has more than 300 product models and launches no less than 30 new categories every year. 2) the upgrading of sales model promotes sales growth: the company has more than 500 terminal outlets, and continues to expand sales channels, carrying out O2O and B2C e-commerce models and Schimmel resource integration in platforms such as Tmall and JD.com, maintaining rapid growth in all channels and maintaining the first position in the scale of global piano production and sales. 3) deepening the development of channels at home and abroad: internationally, with Asia, Europe and the United States as the core, it has more than 200 sales and service outlets in more than 100 countries and regions; the company has a domestic market share of more than 35% and a global market share of more than 25%.

Join hands with Nandu Guangyuan Entertainment and Southern Sports to enrich the partners of the Cultural Innovation Park; join hands with mature property and education enterprises to promote music education and sales of musical instruments, focusing on Internet + 's art education and value service system; the main product structure has been continuously optimized, and high-end piano brands set sail. Guangzhou state-owned assets reform is scarce, and more efforts will be made to strengthen the transformation and upgrading of cultural services. We maintain the profit forecast of the company's EPS of 0.15,0.17,0.20 yuan in 2018-2020. the current stock price (6.14yuan) corresponds to 41 times, 36 times and 31 times of PE in 2018-2020. we are optimistic about the company's long-term development direction of the comprehensive layout of high-end musical instrument manufacturing, music education, culture, finance and media industry, and join hands with property and education enterprises to further accelerate the promotion of the cultural industry and maintain the increase of holdings.