Under the influence of the 2022H1 epidemic, the overall operation of the company is stable. The company's total 2022H1 revenue is 7.74 billion yuan (year-on-year + 14.2%), comprehensive gross profit 4.39% (year-on-1.56pct), return-to-mother net profit 64.258 million yuan (year-on-year-51.8%), return-to-mother net profit 0.83% (year-on-year-1.14pct) Deducting non-return net profit of 64.288 million yuan (year-on-year), mainly due to large investment income resulting from the sale of shares in Binzhou Koda Real Estate, Dongying Keying Real Estate and Beijing Digital 100 Information Technology in the same period last year; net cash flow of operating activities-420 million yuan (year-on-year-421.1%).

Digital marketing base business is expected to return to normal and increase efficiency in the second half of the year. 2022H1, the company's brand marketing sector continues the first trend of market share in the automotive segment, with more than 10 customers of more than 100 million cooperation, luxury cars and joint ventures account for more than 60%, actively optimize customer structure, expand new energy vehicle brands, and increase customer expansion in FMCG, finance and other non-automobile industries. The effect marketing section completes the performance plan made at the beginning of the year and promotes steadily in cooperation with Toutiao, Tencent and Kuaishou Technology media. At the same time, the company established a full-link e-commerce service team to speed up the development of live e-commerce business, enhance the effectiveness of marketing, and achieved excellent results of TOP3, a DP service provider in Douyin's food and beverage industry, on the food track. The company intends to raise no more than 800 million yuan from the indirect controlling shareholder (Bowen Investment, a wholly-owned subsidiary of Zhejiang Investment) in a non-public offering of A shares at a price of 4.85 yuan per share, which is mainly used for AI intelligent marketing, live broadcast and short video smart marketing ecological platform projects to enhance comprehensive marketing strength.

Significant breakthroughs have been made in digital culture innovation business, and related projects have continued to land. Hangzhou Zhejiang Science and Technology, a wholly-owned subsidiary, serves as the core carrier for the company to explore new tracks and incubate new business. Innovative business: 1) Virtual digital human: a mature commercialization path has been explored, Dongfeng scenery customized virtual human "Ketan" has been delivered, and the AVIC digital twin project has also achieved phased delivery. 2) Digital Collection: Zhejiang Mita Digital Art platform was officially launched in March 2022. As of the date of disclosure of the 2022 China News, the platform has achieved more than 420000 registered users, and has jointly sold various series of digital art collections with Chinese artist master Cai Zhizhong, Internet celebrity IP Wang Blueberry, automobile brand FAW Toyota and other fields, with a total distribution of more than 260,000 copies. The company and Zhejiang Wen Exchange signed the "Cultural Industry Digital Strategic Cooperation Framework Agreement" to jointly build a digital assets trading platform. At present, the two sides have made substantial progress in opening up the underlying infrastructure and cooperation in promoting innovation and entrepreneurship competitions. 3) Cultural content: the development of short drama project is online. On the one hand, the innovative business plate can form a complementary linkage with the company's existing marketing business, on the other hand, realize the extension of the company's business from B to C, speed up the ecological construction of digital culture, and create the main platform of digital culture under Zhejiang Wentou.

Maintain earnings forecasts and valuations. We expect the company's fully diluted EPS to maintain 0.30 yuan per share, 0.37 yuan per share and 0.44 yuan per share respectively from 2022 to 2024. With reference to the comparable company's 25 times PE valuation in 2022, considering that the company is actively exploring high-growth digital content and digital culture new business segments, maintaining the company's 30 times PE valuation in 2022, corresponding to the target price of 9 yuan per share, and maintaining a "better than the market" rating.

Risk hint. The repair of digital marketing business is not as expected, and the profit contribution of innovative business is not as expected.