Company Profile

Great Wall International ACG Co Ltd in mainly involved in the business of cocking.

Event

Great Wall International Acg Co., Ltd. is going to pay 36.24 million newly‐issued shares and CNY248 million cash for 100% stake in Lingjing Technology and Mini World. It will place another 33.49million shares to raise CNY 425 million in the meantime.

Comment

Great Wall International Acg will spend CNY 510 million （26 million shares and CNY 178 millioncash） on 100% stake in Lingjing Technology. And it promised that the net profit will be no lessthan CNY 35 million in 2016, CNY 43.75 million in 2017 and CNY 54.69 million in 2018. Principallyengaged in multimedia exhibition and tourism business, Lingjing Technology is able to apply itsVR technology and abundant experience in the field to the Company's creative park in Chuzhou.

Mini World provides offline places and client resources to the Company, serving as good IPdistribution channels. Price of Mini World in the transection registered at CNY 200 million （to paywith 10.24 million shares and CNY 70 million cash）。 Mini World promised its net profit will be noless than CNY 17 million in 2016, CNY 22.10 in 2017 and CNY 28.73 in 2018. It focuses on offlineexperience shop construction and has developed a large client resource base, helping Great WallInternational Acg's IP approaching customers.

Earnings Forecast and Investment Recommendations: We made EPS forecast for the Company atCNY 0.38 in 2016, CNY 0.47 in 2017 and CNY 0.57 in 2018, implying 38x/31x/25x PE. We areoptimistic about the results of M&A in culture and entertainment fields and give OUTPERFORMrating for the Company.

Potential Risks: M&A, tourism projects and film & animation businesses generate worse‐thanexpectedresults.