The 2016 results were in line with expectations. Leo Co., Ltd. announced 2016 results: operating income of 7.354 billion yuan, up 67.4% year on year; net profit attributable to the parent company was 571 million yuan, up 153.3% year on year, corresponding to profit of 0.36 yuan per share, in line with expectations. The development trend is to acquire companies and promote strong performance growth. The rapid growth in overall performance is mainly due to Wan Sheng Weiye and Minimalist Era being included in the scope of the company's consolidated statements since December 2015, and Smart Fun Advertising has been included in the scope of the company's consolidated statements since September 2016. The net profit promised by these three companies in 16 years was 185 million yuan/72 million yuan/58 million yuan, respectively. At the same time, other subsidiaries in the company's digital business segment and the machinery manufacturing business all achieved performance growth. The digital marketing business continues to grow, and its share of revenue has increased. At present, the company's digital marketing services have covered a complete service chain including marketing strategies and ideas, media delivery and execution, effect monitoring and optimization, social marketing, precision marketing, and traffic integration, and has successfully established an integrated marketing platform integrating basic Internet traffic integration to a full range of accurate digital marketing services. In 2016, the company's digital marketing business revenue was 5.357 billion yuan, an increase of 126.9% over the previous year. The proportion of digital marketing revenue in total revenue increased from 53.75% at the end of 2015 to 72.84%. It is proposed to issue convertible bonds, acquire 15% of Shanghai Manku's shares, and pay the final payment of the previous period. The company plans to issue convertible bonds to raise 2,948 billion yuan, which will be used for projects such as the acquisition of 15% of Shanghai Manku's shares and payment of the final payment, the construction of a digital advertising trading platform, and the construction of a digital marketing cloud platform. Shanghai Manku is a leading digital marketing company in China, focusing on providing integrated marketing services for digital media. After acquiring 15% of Shanghai Manku's shares, the company became a digital marketing group that can provide one-stop integrated digital marketing services, ranking among the leading echelons of the domestic digital marketing industry. Profit forecast We lowered our 2017 net profit forecast by 4.65% from 818 million yuan to 780 million yuan. Introduce a net profit forecast of 1,002 billion yuan for 2018. Valuation and recommendations Currently, the company's stock price corresponds to a price-earnings ratio of 30 times in '17. We maintain our recommended rating. Considering the downward shift in the valuation center, we lowered the target price by 20.82% to RMB 17.00, which is 17.08% higher than the current stock price. The target price corresponds to a price-earnings ratio of 35 times in '17. The risk pump business declined, and the performance of mergers and acquisitions fell short of expectations, resulting in net profit growth falling short of expectations and impairment of goodwill, and the effects of integration and synergy fell short of expectations.