I. Overview of events

In 2016, the company achieved operating income of 1.824 billion yuan, an increase of 17.39% over the same period last year, and the net profit attributed to the parent company was 223 million yuan, down-21.32% from the same period last year. After deducting non-recurring profit and loss, the net profit attributed to the parent company was 218 million yuan, an increase of 9.11% over the same period last year. Basic earnings per share is 0.22 yuan. The weighted average return on equity is 13.50%. The net cash flow generated by operating activities was 214.97% compared with the same period last year. The company's net profit from January to March 2017 is expected to be-19 million yuan to-16 million yuan, compared with-14.9217 million yuan in the same period last year, down 27.35% and 7.24% from the same period last year.

II. Analysis and judgment

The company's operating income increased steadily, print media advertising and new media business accounted for the largest proportion, education and outdoor advertising grew rapidly.

In 2016, against the backdrop of the national newspaper advertising business, the company's revenue from print media advertising and event planning totaled 571 million yuan, down 2.57 percent from the same period last year, accounting for 31.3 percent of the company's total revenue. The subsidiaries worked hard to stabilize the page advertising revenue. Relying on the advantage of the party newspaper, Hangzhou News Media Company's operating income increased by 4.49% over the same period last year, and its net profit increased by 10.69% compared with the same period last year. The company also relies on its subsidiary Fengsheng Media, based on the outdoor advertising industry, strongly operates the advertising business of the main lines of Hangzhou Metro. Revenue in 16 years was 148 million yuan, an increase of 68.67% over the same period last year, accounting for 8.11% of the company's revenue.

The company independently accounts for 379 million yuan in revenue of new media enterprises, an increase of 35% over the same period last year, accounting for 20.81% of revenue. Coupled with the steady development of multimedia and multi-form outdoor advertising, the total share has been close to the company's traditional print media advertising revenue share.

The company acquired a 60% stake in the future of secondary education in 2016, successfully entering the education market with vocational education as the core.

In 2016, there will be 3 new vocational education programs, 12 new IT education programs and 13 new online education programs. The operation is good and the business development is smooth. Although the consolidated period is only from April to December, the company's education industry revenue has reached 139 million yuan, accounting for 7.65% of the company's revenue.

The company relies on the superior resources of the media to open up new channels. In the printing industry, the proportion of non-newspaper income in the entire printing industry is 66.61%, and the income structure is further optimized. After the merger offset, the company's external printing revenue was 191 million yuan (all commercial printing), an increase of 8.48% over the same period last year. This part accounts for 10.47% of revenue.

Private placement intermediaries have been established, and the company's capital operation has steadily carried out the work of launching targeted additional offerings in 2016, and the intermediary agencies for fixed additional projects have been identified. At present, the research and demonstration of fund-raising projects and the writing of feasibility analysis reports are all progressing smoothly. Among them, Jingdian Bowei, which accounts for 35% of the shares, fulfilled the performance promise of the year, and the audited net profit attributed to the parent company in 2016 was 34.47 million yuan. Huachuang full Media Science Park, which accounts for 40% of the company's investment, has successfully opened the park. At present, the quality of the resident enterprises is good, and the operation momentum of the park is good. Huatai first Media Company, which accounts for 51% of the company's investment, continues to lay out big data's field and is currently operating normally.

The national policy supports the development of education business and creates the momentum of multi-business development. In 2015, the scale of China's private education industry reached nearly 800 billion yuan, and the industry CAGR (compound annual growth rate) is expected to be about 21.3% in the next five years. After the revision of China's Law on the Promotion of Private Education in 2016, the reform in the field of private education has been accelerated, the profitability of secondary education will be further enhanced in the future, and the development prospect is promising. According to the agreement, the original shareholders of Zhongjiao promised that the net profit of 2016,2017 and 2018 would be no less than 58 million yuan, 68 million yuan and 79 million yuan respectively in accordance with the principle of deducting non-recurring profits and losses, which will cultivate new performance growth points for listed companies, reduce the impact of traditional media advertising revenue fluctuations on the operating performance of listed companies, and enhance the risk resistance of listed companies. Create a good momentum of multi-business development and performance growth prospects.

Third, profit forecast and investment suggestions

We forecast that the net profit of the company in 17,18 and 19 will be 323 million yuan, 335 million yuan and 353 million yuan respectively, and the EPS of the company from 2017 to 2019 will be 0.32 yuan, 0.33 yuan and 0.35 yuan respectively, and the corresponding PE of the current stock price is 26x, 25x and 24x respectively.

As the third overall listed company of media operating assets in China newspaper Group, the company not only achieves 117 million user coverage through all-media channels, but also has the advantages of government resources and user flow, so the space for follow-up development is worth looking forward to. The company will be given 30-35 times PE in 2017, with a reasonable valuation of 9.6-11.2 yuan in the next 12 months, and a "cautious recommendation" for the first rating.

Fourth, risk tips:

1, macroeconomic downturn; 2, business expansion is not as expected.